U.S. Transportation, Distribution, and Logistics Sector Reeling from One-Two Punch of Shrinking Talent Pool, Growing Demand for Higher Wages, UKG Survey Uncovers

As global trade-policy questions linger, a new UKG survey shows the U.S. transportation, distribution, and logistics (TDL) sector is reeling from the one-two punch of a shrinking talent pool and growing demand for higher wages. According to the UKG TDL survey, 79% of operations leaders say labor isn't effectively aligned with demand fluctuations at their organizations, and more than one-third (35%) report they don't have enough workers to consistently fill schedules.

Meanwhile, TDL employees are commanding more money for their talents: 79% of TDL organizations report increased labor costs over the past year, with 91% saying their overtime (OT) costs have gone up. Wages and benefits also rank as the No. 1 most significant workforce-cost pressure that increased year over year (YoY).

Separate from the UKG TDL survey findings, YoY data from the UKG Workforce Activity Report - a monthly analysis of frontline shift work utilizing employee time punch and payroll data from more than 6 million hourly employees in the United States - also shows real hourly earnings increased 4.8% throughout TDL from July 2024 to July 2025, compared with a 1.4% wage increase across all frontline industries, after accounting for price inflation.

Rising Labor Costs Top List of Biggest Business Impacts for TDL, Jobs Remain Difficult to Fill
Leaders don't expect their financial challenges to disappear anytime soon, as rising labor costs top the list of workforce issues TDL organizations believe will have the biggest impact on business performance in the coming year. According to the UKG survey, the top five concerns are:

Among the key operational challenges at their organizations - from compliance risks to employee engagement - TDL leaders say their workforce strategies are the least effective at addressing labor shortages, yet most effective at managing compliance risks.

Tied to the labor shortage, turnover continues to trouble TDL organizations, too. More than 1 in 5 leaders (22%) report turnover rates above 45% at their organizations, and at least half are unable to fill open roles within 30 days of a job being posted. Leaders say a lack of qualified candidates and competition for talent are their most frequent hiring and onboarding challenges. Unpredictable scheduling is cited as a top turnover driver by 1 in 5 TDL leaders (20%).

AI is Helping TDL Better Navigate Scheduling, Industry Challenges - Especially in Transportation
There are some bright spots uncovered in the UKG survey, particularly in the transportation industry, which is leading the way in areas such as hiring increases, employee retention, and scheduling alignment - thanks, in part, to the early adoption of AI and workforce management technology. For example, 78% of transportation organizations report they have increased hiring volumes over the past 12 months, far surpassing the 51% of organizations in distribution and 46% in logistics that have increased hiring.

Organizations setting the pace in technology adoption have also seen direct benefits such as reduced absenteeism. In transportation, 47% of organizations currently use AI-driven technology for workforce planning, 46% employ self-service tools, and 39% leverage predictive labor-forecasting solutions. With those technologies deployed at their organizations, 64% of transportation leaders say fewer than 10% of shifts go unfilled due to employee absenteeism, compared with 40% of leaders in distribution and 29% in logistics.

"Across the TDL sector and for other UKG customers, our AI-driven scheduling technology is helping organizations predict what's ahead - even in periods of high uncertainty - to help ensure they're staffed at the right levels, at the right times," said Robert O'Dwyer, logistics industry principal at UKG. "While distribution and logistics trail transportation in automation adoption, every TDL organization UKG surveyed has invested in workforce technology over the past year, which shows they're focused on the right factors heading into the future."

HR, Operations Leaders Can Team Up to Solve Workforce Challenges
UKG released a new report that explores how HR and operations leaders in the TDL sector can partner together to build strategies and implement AI tools and technology that help manage labor costs, boost employee engagement, and maintain error-free compliance - all while keeping their organizations healthy and competitive.

"From the smallest organizations to the largest multinationals looking to scale, AI-powered workforce management tools provide workers with more autonomy around their schedules and greater flexibility, which is king for the frontline workforce," said O'Dwyer. "This will help organizations prevent understaffing issues, while data-driven solutions and people analytics empower leaders to better anticipate hidden labor expenses, such as unbudgeted OT or long time-to-hire rates."

Download the executive report, " A Critical Partnership for Success ," to learn more about the UKG TDL survey and discover effective strategies for navigating the sector's workforce challenges.

About UKG

At UKG, our purpose is people^®. We are on a mission to inspire every organization to become a great place to work through HCM technology built for all. More than 80,000 organizations across all sizes, industries, and geographies trust UKG HR, payroll, workforce management, and culture cloud solutions to drive great workplace experiences and make better, more confident people and business decisions. With the world's largest collection of people data, work data, and culture data combined with rich experience using artificial intelligence in the service of people, we connect culture insights with business outcomes to show what's possible when organizations invest in their people. To learn more, visit ukg.com .

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Survey Methodology: Research findings are based on a survey conducted by InnovateMR on behalf of UKG to better understand the current state of the U.S. transportation, distribution, and logistics (TDL) sector, with a focus on workplace trends and hiring practices. Responses were collected between May 2 and May 20, 2025, from 400 directors, VPs, and C-suite leaders in HR (65%) and operations (35%) at U.S.-based organizations with 1,000 or more employees. This is the first-annual UKG TDL sector survey of its kind.

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