Warehouse labor shortages remain a challenge for retailers, distributors, manufacturers, and other companies operating high-volume distribution facilities. But adding permanent employees is not the only way to increase warehouse capacity.
Companies can scale warehouse labor through better workforce planning, cross-training, process improvements, contingency labor, traditional staffing services, and managed warehouse labor solutions. The right approach depends on whether the challenge is temporary volume, persistent turnover, rapid growth, productivity, or the need to operate an entire warehouse function more effectively.
For many operations, the larger question in 2026 is no longer simply “How do we hire more people?”
It is:
“How do we create enough reliable labor capacity to keep the operation running without continually adding internal headcount?”
Why Are Warehouses Still Facing Labor Shortages in 2026?
The warehouse labor market has changed, but the underlying operational challenge has not disappeared.
The U.S. warehousing and storage industry employed approximately 1.85 million people in June 2026, according to the U.S. Bureau of Labor Statistics. Large occupational groups within the industry include stock clerks and order fillers, material movers, forklift operators, and shipping and receiving personnel.
For warehouse operators, however, overall employment numbers tell only part of the story.
A distribution center can technically be fully staffed and still have a labor-capacity problem.
Common causes include:
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High employee turnover
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Absenteeism
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Seasonal demand
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Unexpected inbound volume
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Rapid customer growth
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Difficulty filling specific shifts
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Long recruiting and onboarding cycles
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Inconsistent productivity
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Competition for experienced warehouse employees
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New facility openings or expansions
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Management and supervisory constraints
Labor availability can also change dramatically from one market to another.
A recruiting strategy that works well at one distribution center may struggle at another location because of local wages, commuting patterns, competing employers, shift schedules, or the available workforce.
The result is that warehouse labor shortages are often less about the total number of available workers and more about having the right number of trained, productive people available at the right time.
Why Isn’t Adding Internal Headcount Always the Best Solution?
Hiring additional employees is the obvious response to a warehouse labor shortage.
But it can also create another problem: building permanent labor capacity around temporary or unpredictable demand.
Warehouse volume rarely moves in a perfectly straight line.
Retail promotions, seasonal demand, supplier deliveries, new customers, product launches, transportation disruptions, and unexpected inbound freight can create substantial swings in workload.
If a warehouse staffs internally for peak demand, it may carry excess labor when volume falls.
If it staffs for average demand, the facility may become overwhelmed when volume increases.
There are also responsibilities associated with every additional internal employee, including:
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Recruiting
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Interviewing
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Hiring
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Onboarding
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Training
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Scheduling
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Payroll
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Benefits
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Supervision
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Performance management
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Safety management
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Turnover replacement
That is why the better question is often not simply how many employees a warehouse needs.
It is:
How much productive labor capacity does the operation need?
Those are not necessarily the same thing.
What Are the Options for Scaling Warehouse Labor?
Warehouse leaders generally have four primary options when additional labor capacity is needed.
1. Increase Internal Warehouse Staffing
The company recruits, hires, trains, and manages additional employees directly.
This model can work well when volume is predictable and the warehouse has a strong recruiting pipeline, stable workforce, and sufficient management capacity.
The downside is that the organization assumes the entire recruiting and workforce-management burden.
2. Use Warehouse Staffing Services
A traditional warehouse staffing company provides workers who operate under the customer’s management structure.
This can provide additional flexibility when the primary challenge is finding enough people.
However, the warehouse’s internal leadership team generally remains responsible for directing the workforce, training employees, measuring productivity, solving operational issues, and managing daily performance.
3. Add Contingency Labor
Contingency labor provides additional workforce capacity when a warehouse experiences an unusually high-volume period, disruption, labor shortage, facility launch, or other short-term operational challenge.
This can be especially useful when the company does not want to permanently increase headcount to address a temporary need.
4. Use a Managed Warehouse Labor Partner
Managed warehouse labor goes beyond supplying employees.
Instead of simply providing workers, a managed labor provider can assume responsibility for staffing and operating a defined warehouse function.
That may include recruiting, onboarding, training, scheduling, supervision, productivity management, reporting, and day-to-day workforce performance.
This creates an important distinction.
Staffing provides people. Managed labor provides operational capacity.
What Is the Difference Between Warehouse Staffing and Managed Warehouse Labor?
Although the terms are sometimes used interchangeably, warehouse staffing and managed warehouse labor are different operating models.
A warehouse staffing provider primarily helps a business fill positions.
A managed warehouse labor provider assumes responsibility for managing the labor required to perform an agreed-upon warehouse operation.
For example, a distribution center struggling with inbound receiving might ask a staffing company to provide 20 workers.
Internal warehouse management would still need to determine:
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Where those employees work
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How they are trained
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Who supervises them
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What productivity standards they follow
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How performance is measured
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How scheduling is handled
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How absences are replaced
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How workflow changes throughout the day
Under a managed labor model, many of those responsibilities shift to the operating partner.
The conversation changes from:
“Can you provide us with 20 people?”
to:
“Can you manage this part of our warehouse operation?”
That distinction becomes increasingly important as distribution centers look for ways to scale without continually expanding internal recruiting, supervisory, and administrative infrastructure.
Which Warehouse Functions Can Be Outsourced?
Many labor-intensive warehouse functions can be supported or managed by a specialized warehouse labor provider.
Depending on the facility and operating model, these may include:
Inbound Unloading
Unloading floor-loaded trailers, palletized freight, containers, and inbound shipments.
Receiving
Supporting the movement of product from the dock into the warehouse receiving process.
Put-Away
Moving received inventory to designated warehouse locations.
Replenishment
Maintaining sufficient inventory in forward picking locations to support order fulfillment.
Order Selection
Selecting products for store replenishment, customer orders, or outbound distribution.
Picking and Packing
Supporting fulfillment operations where individual items, cases, or units must be selected and prepared for shipment.
Returns and Reverse Logistics
Processing returned, damaged, rejected, or reusable products moving back through the supply chain.
Inventory Support
Assisting with inventory relocation, product movement, cycle-count support, and warehouse reorganization.
Dock Operations
Managing labor-intensive activities associated with inbound and outbound dock operations.
Full Warehouse Operations
In some environments, companies may choose to outsource multiple warehouse functions under a broader managed workforce model rather than contracting for an individual task.
When Does Outsourcing Warehouse Labor Make Sense?
Outsourcing does not make sense for every warehouse.
A facility with stable volume, low turnover, strong productivity, reliable recruiting, and an experienced internal management team may have little reason to change its labor model.
The case for outsourcing becomes stronger when labor variability begins interfering with the operation.
Common situations include:
Rapid growth
A company is adding customers or volume faster than its internal recruiting organization can scale.
Seasonal demand
The warehouse needs significantly more capacity during predictable peak periods but does not need that headcount throughout the year.
Chronic turnover
Managers spend significant time continually replacing employees rather than managing the operation.
New distribution center openings
A company must quickly recruit, train, and manage a large workforce in a new labor market.
Unexpected volume
Inbound freight, customer demand, promotions, transportation delays, or operational disruptions suddenly create more work than the facility can handle.
Management constraints
Existing warehouse managers have enough responsibilities without also managing a continually changing supplemental workforce.
Labor-intensive warehouse functions
Specific parts of the operation—such as unloading, order selection, receiving, or reverse logistics—consume disproportionate management attention.
Expansion into new markets
A company needs labor infrastructure in locations where it has limited recruiting experience.
In these situations, outsourcing can provide something more valuable than additional workers:
scalable operational capacity.
How Can a Warehouse Scale During Seasonal or Unexpected Volume Spikes?
The first step is identifying whether the volume increase is temporary, recurring, or permanent.
For temporary spikes, permanently increasing internal headcount may create unnecessary long-term labor capacity.
Instead, warehouse leaders can create a layered workforce strategy.
The facility’s core internal workforce manages predictable baseline volume.
Flexible or contingency capacity is then added when operational demand exceeds that baseline.
For recurring peaks, historical volume data can help determine when additional capacity should be activated.
For unexpected spikes, access to an established workforce partner can allow a company to respond without beginning a new recruiting effort every time volume increases.
This creates a more flexible operating model:
Core workforce + scalable labor capacity = greater operational resilience.
Can Outsourced Labor Improve Warehouse Productivity?
It can, but outsourcing alone does not guarantee higher productivity.
The operating model matters.
Simply adding more people to an inefficient process may increase labor hours without meaningfully increasing throughput.
Warehouse productivity depends on factors such as:
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Training
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Work methods
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Facility layout
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Equipment
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Scheduling
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Management
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Employee experience
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Incentives
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Performance measurement
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Volume characteristics
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Warehouse management systems
This is another reason to distinguish between staffing and managed labor.
A managed workforce provider should not be evaluated solely on whether it can supply enough employees.
It should also be evaluated on how those employees are managed and how workforce performance is measured.
How Should Companies Evaluate a Warehouse Labor Partner?
Warehouse leaders considering an outsourced labor solution should evaluate more than hourly pricing.
Important questions include:
Does the provider specialize in warehouse operations?
Warehouse work has different productivity, safety, training, equipment, and scheduling requirements than many other labor environments.
Who manages the workforce?
Determine whether the provider simply supplies workers or provides onsite leadership responsible for managing them.
How is productivity measured?
Ask how performance is tracked and what operational metrics are used.
How are employees trained?
Understand who is responsible for onboarding, warehouse-specific training, safety expectations, and job instruction.
How does the provider handle turnover and absenteeism?
The provider should have a clear process for maintaining labor coverage when employees leave or miss shifts.
Can the provider scale?
A provider supporting one facility today may eventually need to support additional shifts, functions, buildings, or geographic markets.
What industries does the provider understand?
Warehouse requirements can vary considerably among grocery, food and beverage, retail, consumer packaged goods, automotive, cold-chain, and general merchandise operations.
Does the provider understand operations—or just recruiting?
The strongest warehouse workforce partners should be able to discuss throughput, productivity, labor planning, workflow, safety, and operational performance—not simply recruiting.
What Should Warehouse Leaders Do First?
Before deciding whether to hire, use a staffing company, or engage a managed warehouse labor provider, define the actual operating problem.
Ask:
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Is the problem recruiting or productivity?
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Is the additional volume temporary or permanent?
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Which warehouse functions are creating the labor constraint?
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How much management time is being spent on hiring and workforce administration?
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Does the facility need more employees—or more productive capacity?
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How frequently does volume exceed available labor?
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What happens operationally when the warehouse becomes understaffed?
The answers help determine which labor model makes the most sense.
For some operations, internal hiring remains the right solution.
For others, the more scalable approach may be keeping a strong internal organization while partnering with a specialized provider to manage labor-intensive warehouse functions.
The goal is not outsourcing for the sake of outsourcing.
It is building a warehouse workforce model that can adjust as quickly as the operation does.
Frequently Asked Questions About Warehouse Labor Shortages
What causes warehouse labor shortages?
Warehouse labor shortages can result from high turnover, absenteeism, seasonal demand, competition for workers, rapid business growth, difficult-to-fill shifts, recruiting limitations, and fluctuations in warehouse volume. A facility may also experience a labor shortage when it technically has enough employees but lacks enough trained or productive labor to meet current operational demand.
How can a warehouse scale labor without hiring more employees?
Warehouses can scale capacity without permanently adding internal headcount through cross-training, process improvements, flexible scheduling, contingency labor, warehouse staffing services, automation, and managed warehouse labor providers. The best solution depends on whether additional labor demand is temporary, seasonal, recurring, or permanent.
What are warehouse staffing services?
Warehouse staffing services provide employees to help a warehouse fill open positions or supplement its existing workforce. The warehouse customer typically remains responsible for directing the employees, supervising the operation, establishing productivity expectations, and managing daily workflow.
What is managed warehouse labor?
Managed warehouse labor is an outsourcing model in which a third-party provider assumes responsibility for staffing and managing a defined warehouse operation or function. Depending on the agreement, responsibilities may include recruiting, training, scheduling, onsite supervision, productivity management, reporting, and workforce performance.
What is the difference between warehouse staffing and managed labor?
Warehouse staffing primarily provides workers, while managed warehouse labor provides both workers and operational management. With managed labor, the provider may assume responsibility for supervision, productivity, scheduling, training, and performance within a defined warehouse function.
When should a company outsource warehouse labor?
Companies often consider outsourcing warehouse labor when they experience seasonal volume, rapid growth, chronic turnover, recruiting challenges, new facility openings, unpredictable inbound volume, productivity issues, or a need to increase warehouse capacity without expanding permanent internal headcount.
What warehouse jobs can be outsourced?
Common outsourced warehouse functions include trailer unloading, receiving, put-away, replenishment, order selection, picking, packing, returns processing, reverse logistics, inventory support, dock operations, and other labor-intensive distribution activities.
How do you scale warehouse labor during peak season?
Warehouses can prepare for peak season by forecasting volume, identifying baseline internal labor requirements, cross-training employees, scheduling additional shifts, and arranging flexible or contingency labor before demand reaches its peak. A workforce partner can provide additional capacity without requiring the company to maintain peak-season headcount throughout the year.
Is outsourced warehouse labor the same as temporary staffing?
Not necessarily. Temporary staffing generally provides supplemental workers for a limited period. Outsourced or managed warehouse labor can involve a provider taking ongoing responsibility for staffing, supervising, and managing an entire warehouse function.
What should companies look for in a warehouse labor provider?
Companies should evaluate warehouse experience, onsite management capabilities, employee training, productivity measurement, workforce retention, safety processes, scalability, geographic coverage, implementation experience, and familiarity with the company’s industry and warehouse environment.
Building a More Scalable Warehouse Workforce
The warehouse labor challenge in 2026 is not simply finding more people.
It is creating a workforce model capable of adjusting to changing volume without allowing labor availability to determine how much business the operation can handle.
For warehouse and supply chain leaders, that may mean combining a strong internal workforce with outside expertise for the parts of the operation that require greater flexibility, specialized management, or additional capacity.
FHI has spent more than 30 years helping companies manage labor-intensive warehouse operations across the United States. FHI’s managed workforce solutions can support individual warehouse functions or broader operational requirements, including unloading, receiving, order selection, replenishment, reverse logistics, inventory support, contingency labor, and managed warehouse operations.
If labor availability is limiting your warehouse capacity, FHI can help you evaluate the operation and determine where a managed workforce approach may make sense.
We’re here to help. There’s no pitch – just a conversation.