Future Problems in Logistics Due to Demographic Change

Klumpp, Matthias; Bioly, Sascha; Witte, Christian Conference Paper Future Problems in Logistics Due to Demographic Change Provided in Cooperation with: Hamburg University of Technology (TUHH), Institute of Business Logistics and General Management Suggested Citation: Klumpp, Matthias; Bioly, Sascha; Witte, Christian (2014) : Future Problems in Logistics Due to Demographic Change, In: Kersten, Wolfgang Blecker, Thorsten Ringle, Christian M. (Ed.): Next Generation Supply Chains: Trends and Opportunities. Proceedings of the Hamburg International Conference of Logistics (HICL), Vol. 18, ISBN 978-3-7375-0339-6, epubli GmbH, Berlin, pp. 51-68 This Version is available at: https://hdl.handle.net/10419/209200 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by-sa/4.0/  51 Future Problems in Logistics Due to Demographic Change Matthias Klumpp, Sascha Bioly and Christian Witte Abstract This research paper describes the impact of demographic change on the transport and logistics sector. Therefore, besides a literature review and a management option discussion in the end, the paper contains the following two main sections and methods: First an empirical report of a 2014 survey conducted in the research project “DO.WERT” regarding the working conditions of truck drivers in Germany (working hours, wages, motivation, qualification; n=483). Second, an optimization prognosis (GAMS conceptualization) for the German truck driver labor market in 2030 including increased traffic volumes, restricted carbon dioxide emissions as well as a market-based wage cost function draft. Existing research has shown that major disruptions in the “triangle” of increasing traffic volumes, decreasing populations and also politically intended decreases in carbon dioxide emissions have to be expected, for example for logistics wage and also freight rates markets. Keywords: demographic change, transport volume simulation, road transport wage simulation, transport mode prognosis  Matthias Klumpp, Sascha Bioly and Christian Witte 52 1. Introduction Demographic change in the form of less people and population shares within the workforce age will hit Germany and other European countries in the next 30 to 50 years. This may have severe consequences for specific economic sectors and industries as for example Thun, Größler and Miczka report for the German manufacturing industry (2007). First discussions are also starting regarding the logistics industry (e.g. Bioly, 2014; Kutlu, Klumpp and Bioly, 2013), highlighting the obviously increasing conflicting targets of economic growth, increasing traffic volumes and carbon reduction objectives while facing a shrinking workforce in logistics. Therein the crucial occupational group of truck drivers in road transport has received special attention, for example as Min and Emam have shown for the impact on business results in the USA (2003). At the same time, especially this group is facing unfavorable social and working conditions already today (de Croon et al., 2004) - which will worsen due to a general lack of motivated and available people to enter this specific job segment in logistics: In Germany alone, up to 300.000 of altogether 800.000 truck drivers are expected to be retired in the next ten years - without proper concepts and ideas how and with which persons to replace them (BAG, 2012). As the most recent report from the European Commission outlines in April 2014, this problem is increasing due to time pressure, technological developments and requirements as well as health and security risks in road transportation (Europäische Kommission, 2014, p. 21). This may well further increase the already significant cost differences in trucking and road transport throughout Europe (figure 1). Therefore, this research contribution outlines the significance of this occupatio¬nal group for the whole logistics industry by discussing empirical results regarding working conditions 2014 in Germany (section 2), combining this with a draft simulation study regarding expected wage effects of demographic change (section 3) and a first draft of possible countermeasures and human resource concepts specifically for this group (section 4). Future Problems in Logistics Due to Demographic Change 53 Fig. 1: Variable costs for trucking in Europe (Europäische Kommission, 2014, p. 12, 16) 2. Empirical Status Quo Description During the first half of 2014 a survey was conducted in the research project “DO.WERT” regarding the working conditions of truck drivers in Germany regarding working hours, wages, motivation and qualifications. Truck drivers were asked in personal sessions at their work place, in trainings and seminars as well as e.g. in driver evening meetings (organized by the German police). Altogether 483 persons took part in the survey; the following results are reporting some highlights from the study. (a) Gender: 96.4 % of drivers with professional experience are male, 3.6 % of them are female. With a view to the trainees, the proportion of female drivers with 6.3 % is twice as high. The proportion of male trainees here is 93.7 %. In the sophisticated examination of the group of trainees it is significant that 16.9 Matthias Klumpp, Sascha Bioly and Christian Witte 54 % of them are female trainees for becoming specialists in driving vehicles, but the proportion of professional female drivers in training is only 1.5 %. (b) Appreciation: The appreciation which is brought to the trainees and the drivers with professional experience, by this it is assessed overall mediocre to negative. Altogether, the surveyed drivers feel despised by the society. About half of the respondents (55.3%) indicate that they were ‘rather little’ to ‘very little’ or to ‘none’ appreciated by the society (figure 1). Only 14 % feel ‘very much’ or ‘rather much’ appreciated by the society. 31 % valued this with ‘mediocre’. On average, the rating is 3.6 on a scale from ‘1 = very much’ to ‘5 = very little/none‘. The standard deviation is 1.1. With an average of 3.2 the respondents on side of the customers feel better appreciated. A quarter said that they are ‘very much’ or ‘rather much’ appreciated by customers, almost 40 % rate this as ‘mediocre’, 37 % feel ‘rather little’ or ‘none’ appreciated (next figure). The appreciation the dispatcher have given to the drivers is rated on average with 3.1 and with a standard deviation of 1.2. Fig. 2: Appreciation of vehicle drivers in society 14.0 % 30.7 % 55.3 % 0 % 20 % 40 % 60 % very much/rather much mediocre rather little/none How much appreciation receives your profession in society? Future Problems in Logistics Due to Demographic Change 55 Fig. 3: Appreciation of customers Nearly a third of the respondents is appreciated ‘very much’, ‘rather much’ or ‘mediocre’ by this group of people. 36 % feel ‘rather little’ or ‘none’ appreciated at this point. Fig. 4: Appreciation of dispatchers 24.4 % 38.9 %36.7 % 0 % 10 % 20 % 30 % 40 % 50 % very much/rather much mediocre rather little/none How much appreciation do you receive from your customers? 32.4 %31.6 %36.0 % 0 % 10 % 20 % 30 % 40 % very much/rather much mediocre rather little/none How much appreciation do you receive from the dispatcher? Matthias Klumpp, Sascha Bioly and Christian Witte 56 (c) Career shifting: In figure 4 the result of the survey concerning the total entire professional and the period of professional experience in the current activity is shown. 0.9 % of all drivers specified that they had gathered more than 5 years of professional experience. 18.3 % of the respondents have been working for more than 5 years as a truck driver. This leads to the conclusion that a majority of the drivers completed an apprenticeship in this. Similar statements can be made in the groups of 6-10 years and 11-20 years. 9 % of the respondents have 6-10 years of professional experience. However, 19.7 % of the respondents work in their current work as a truck driver. 23 % possess between 11 to 20 years of professional experience. 28.4 % said that they have the same professional experience in their current activity. In the groups of 21-30 years and more than 30 years the proportion between the two surveys changes. The duration in the current job is shorter than the entire professional practice years. The greater the professional experience, the shorter the duration in the current job. This suggests a high proportion of career changers. (d) Income and wages: The following figure shows the result of the survey with drivers regarding their monthly gross income. The monthly gross income regarding this survey is normally distributed. The majority of the drivers have a monthly gross income between 2000 € to 2499 € per month. These are 43 % of all surveyed drivers. 22.7 % of all drivers have a gross income between 1500 € to 1999 € and 23.7 % earn 2500 € to 2999 € per month. The minority of the drivers feature less than about 1499 € and more than 3000 € gross income per month. Future Problems in Logistics Due to Demographic Change 57 Fig. 5: Professional experience of vehicle drivers Fig. 6: Monthly gross income of vehicle drivers 3. GAMS Model Driver Wages - Outline Already in 2013, a general GAMS model integrating the overall traffic volume, carbon emission restrictions as well as estimated per-kilometer-cost for the 0.9 % 9.0 % 23.0 %29.3 % 37.8 % 18.3 %19.7 % 28.4 % 20.2 % 13.3 % 0 % 10 % 20 % 30 % 40 % 50 % up to 5 years6 to 10 years 11 to 20 years 21 to 30 years more than 30 years Entire professional experience Professional experience in current activity 1.4 %4.3 % 22.7 % 43.0 % 23.7 % 4.8 % 0 % 10 % 20 % 30 % 40 % 50 % less than 1000 € 1000 € to 1499 € 1500 € to 1999 € 2000 € to 2499 € 2500 € to 2999 € more than 3000 € Matthias Klumpp, Sascha Bioly and Christian Witte 58 European land transport modes road, rail and water (inland waterways) has been developed. The General Algebraic Modeling System (GAMS) is a high-level modeling system for mathematical programming and optimization. It consists of a language compiler and a stable of integrated high-performance solvers. GAMS is tailored for complex, large scale modeling applications, and allows you to build large maintainable models that can be adapted quickly to new situations. GAMS allows the user to concentrate on the modeling problem by making the setup simple. The system takes care of the time-consuming details of the specific machine and system software implementation. GAMS is especially useful for handling large, complex, one-of-a-kind problems which may require many revisions to establish an accurate model. The system models problems in a highly compact and natural way. The user can change the formulation quickly and easily, can change from one solver to another, and can even convert from linear to nonlinear with little trouble (GAMS, 2014). The model formulation is provided here in order to acknowledge the intended changes and extensions later in the chapter (Bioly, Klumpp, 2013): GAMS Model (2030) SETS i modal capacity 2030 / road2011, train, ship, road2015, road2020, road2025, road2030 / j modal use 2030 / use /; PARAMETERS a(i) capacity in mio. tkm / road2011 371000, train 230000, ship 191000, road2015 44000, road2020 42000, road2025 39700, road2030 371000 / b(j) demand / use 1000000 /; TABLE d(i,j) co2 emissions in gr per tkm Future Problems in Logistics Due to Demographic Change 65 these areas (i) a case report is outlined in order to explain this structural approach: In order to extend the available productive working time e.g. for truck drivers, only the productive working time per week may be a feasible option as other approaches regarding the extension of "total life working time" at the beginning (shorting school/education times) and at the end (postponing retirement) may are not applicable (Bioly, Sandhaus, Klumpp, 2014, p. 13-15). During one week with a maximum of 45 hours driving time according to the relevant EU legal framework, only 22.7 hours are actually used for driving in the present situation (average across all fields of short and long distance truck drivers). Therefore, especially at the beginning and the end of driving shifts per day a change and optimization is feasible, e.g. for the question of loading and unloading vehicles at the depot (i.e. CEP services). At this phase, other personnel or even the implementation of automated loading and unloading equipment may be a solution: Automated truck loading systems (ATLS) are technically implemented since the 1980s (IPL, 2008). But the crucial point and process of actual truck loading - inside the truck - is not yet implemented in significant numbers (less than 1 percent of all cases), in contrast to many practical automated intralogistics systems ("Fahrerloser Transportsysteme - FTS"). Though suppliers of such systems as e.g. the Dutch "ANCRA" corporation advertise these systems with their manifold advantages, leading in essence to a reduction of loading times from 40 minutes on average to a minimum of 5 to 8 minutes:  Reduction of overall handling costs (compared to forklift handling);  Less personnel required;  Less moving equipment to be purchased and maintained;  Less handling "ramps" / gates necessary;  Smaller total handling space required (smaller hub buildings);  Less quality problems and damaged goods;  Increased security for personnel (reduced number and severity of accidents). Matthias Klumpp, Sascha Bioly and Christian Witte 66 This is naturally highly dependent on the total handling and transport volume; though the most interesting advantage besides the reduced number of required personnel in the above described context also the further advantages especially regarding security are important. According to different sources up to one fourth of all accidents with logistics personnel are happening in transition handling with forklift trucks (UK numbers by "Health and Safety Executive"). Therefore a strategic investment and switch to automated loading systems may be a general quality and effectiveness driver. First implementation corporations are e.g. Procter & Gamble in Tapeji del Rio (Mexico), Unilever in Chicago (USA) and Heineken in Zoeterwoude (Holland), examples and video descriptions are available (http://goo.gl/ZgT9OH). Though it has to be highlighted for this case application that specific restrictions e.g. for security have to be incorporated, no matter which person or even machine is actually loading and unloading the truck (secure loading and unloading as responsibility of the industry as well as logistics company according to § 22 StVO and HGB in Germany: "According to the German Commercial Code (HGB), the carrier must provide a so called 'reliable loading.' This implies that the vehicle complies with the prescribed dimensions, weights and axle loads according to the transported goods. Based on the Employment Protection Act the carrier also has to ensure that the driver knows and observes the rules of proper cargo securing." This has to be observed even when other personnel or machines are implementing the loading, implying that significant checking and controlling times have to be allocated to the driver anyway. 5. Conclusion and Outloook The presented article has shown the dominant importance of demographic change for the logistics sector, exemplified with the core part of truck drivers and their work for logistics. Future Problems in Logistics Due to Demographic Change 67 The described empirical results highlight the problems already today, especially general and professional appreciation towards truck drivers. This situation will probably worsen and then again increase the labor gap and therefore imply possible shortages in trucking supply for logistics. This would imply significantly rising transport rates as well as driver wages as indicated in the outlined GAMS optimization model as a first draft. For further research and also the impact on business practice and public policy, the main effects as identified here have to be supported and tested by further inquiries, maybe also in a combination of empirical testing and quantitative simulation as outlined in this paper. In any case, the question of availability, motivation and qualification of logistics personnel as for example truck drivers is a keystone of the future development of logistics in Germany and Europe. Matthias Klumpp, Sascha Bioly and Christian Witte 68 References BAG, 2012. Marktbeobachtung Güterverkehr - Auswertung der Arbeitsbeding-ungen in Güterverkehr und Logistik. Köln: BAG Bund. Bioly, S., 2014. Demografischer Wandel, Decarbonisierung und steigende Verkehrsleistung. Logos Verlag Berlin, ISBN: 978-3-8325-3640-4. Bioly, S., Klumpp, M., 2013. Future transportation volume and demographic change, presentation at the Logistics Management Conference 2013, Bremen, 10.- 13.09.2013. Bioly, S., Sandhaus, G., Klumpp, M., 2014. Wertorientierte Maßnahmen für eine Gestaltung des demografischen Wandels in Logistik und Verkehr. ild Schriftenreihe Logistikforschung, Band 42, Essen: FOM ild, ISSN 1866-0304. de Croon, E.M., Sluiter, J.K., Blonk, R.W.B., Broersen, J.P.J., Frings-Dresen, M.H.W., 2004. Stressful Work, Psychological Job Strain, and Turnover: A 2-Year Prospective Cohort Study of Truck Drivers. Journal of Applied Psychology, 89(3), pp. 442–454. Europäische Kommission, 2014. Bericht der Kommission an das Europäische Parlament und den Rat über den Stand des Kraftverkehrsmarkts in der Union. Brussels: EU Publication Office. Institut für Produktionsmanagement & Logistik IPL, 2008. 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Journal of Manufacturing Technology Management, 18(8), pp.985–999. Wolfgang Kersten, Thorsten Blecker and Christian M. Ringle (Eds.) Next Generation Supply Chains Prof. Dr. Dr. h. c. Wolfgang Kersten Prof. Dr. Thorsten Blecker Prof. Dr. Christian M. Ringle (Editors) Next Generation Supply Chains Trends and Opportunities Edition 1st pdf edition, August 2014 Publisher epubli GmbH, Berlin, www.epubli.de Editors Wolfgang Kersten, Thorsten Blecker and Christian M. Ringle Coverdesign Frederik Duchâteau, Moritz Petersen Coverphoto Viktor Rosenfeld / flic.kr/p/e7ujK3 (CC BY-SA 2.0) ISBN 978-3-7375-0339-6 Copyright: This book are licensed under the Creative Common Attribution-ShareAlike 4.0 International License. This book can be downloaded at HICL (hicl.org) or at the TUBdok – Publication Server of the Hamburg University of Technology (doku.b.tu-harburg.de) – ISBN: 978-3-7375-0339-6 A printed version of this is available in your library or book store – ISBN 978-3-8442-9879-6 An alternate version for your ebook reader is available through online ebook stores – ISBN: 978-3-7375-0340-2 Preface Today’s business environment is undergoing significant changes. Demand patterns constantly claim for greener products from more sustainable supply chains. Handling these customer needs, embedded in a sophisticated and complex supply chain environment, are putting the players under a constant pressure: Ecological and social issues arise additionally to challenges like technology management and efficiency enhancement. Concurrently each of these holds incredible opportunities to separate from competitors, yet also increases chain complexity and risks. This book addresses the hot spots of discussion for future supply chain solutions. It contains manuscripts by international authors providing comprehensive insights into topics like sustainability, supply chain risk management and provides future outlooks to the field of supply chain management. All manuscripts contribute to theory development and verification in their respective area of research. We would like to thank the authors for their excellent contributions, which advance the logistics research progress. Without their support and hard work, the creation of this volume would not have been possible. We would also like to thank Sara Kheiravar, Tabea Tressin, Matthias Ehni and Niels Hackius for their efforts to prepare, structure and finalize this book. Hamburg, August 2014 Prof. Dr. Dr. h. c. Wolfgang Kersten Prof. Dr. Thorsten Blecker Prof. Dr. Christian Ringle Table of Contents I. A Look Into the Future - Opportunities and Threats Identification of Megatrends Affecting Complexity in Logistics Systems............. 3 Wolfgang Kersten, Birgit von See and Henning Skirde Planning Approach for Robust Manufacturing Footprint Decisions .................. 29 Philipp Sprenger, Matthias Parlings and Tobias Hegmanns Future Problems in Logistics Due to Demographic Change ............................. 51 Matthias Klumpp, Sascha Bioly and Christian Witte Logistics Trends 2020: A National Delphi Study Concerning the German Logistics Sector ................................................................................................ 69 Stephan Zelewski, Alessa Münchow-Küster and René Föhring Vision of a Service Value Network in Maritime Container Logistics .................. 87 Jürgen W. Böse, Carlos Jahn and Raman Sarin II. Sustainability Efforts Within the Supply Chain Logistics Performance Measurement for Sustainability in the Fast Fashion Industry ........................................................................................................... 113 Anna Corinna Cagliano, Muhammad Salman Mustafa, Carlo Rafele and Giovanni Zenezini Design of Sustainable Transportation Networks ............................................. 137 Wendelin Gross and Christian Butz Exploring Sustainability in Construction Supply Chains.................................. 161 Margherita Pero, Eleonora Bottani and Barbara Bigliardi VII Table of Contents Is Money Really Green? - An Investigation Into Environmental Supply Chain Practices, with a Cost Focus .......................................................................... 183 John Bancroft Relevant Purchase Criteria or Basic Requirement: Customer Perspectives on Green Logistics .............................................................................................. 195 Matthias Klumpp, Julia Naskrent and Nikolaus A. D. Hohl Information Systems and Reverse Logistics: Examining Drivers of Implementation on Multiple Case Study Scenario .......................................... 211 Josip Maric, Florence Rodhain and Yves Barlette Analysing the Role of Rail in Urban Freight Distribution ................................. 223 Katrien De Langhe Truck Loading Dock Process – Investigating Integration of Sustainability ...... 245 Niels Hackius and Wolfgang Kersten How to Attract Air Freight Business: Defining Critical Success Factors for Regional Airports ............................................................................................ 273 David M. Herold, Simon Wilde and Natalie Wojtarowicz Early Supplier Integration in Cast Product Development Partnerships – A Multiple Case Study of Environmental and Cost Effects in the German Foundry Value Chain .................................................................................................... 289 Robert Christian Fandl, Tobias Held and Wolfgang Kersten Sustainable Logistic Scenarios in the NSR Region ........................................ 311 Jacob Kronbak, Angela Münch, Liping Jiang and Lisbeth Brøde Jepsen III. Handling Risk - Concepts Towards Robust SCM A Service Production Planning Model Integrating Human Risk Factors ......... 345 Nguyen Vi Cao and Emmanuel Fragniere VIII