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The True Cost of Temp Labour in Warehousing

Tues 9 Sep 2025

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By OMJ Team

Warehousing Staffing Costs
Temp Labour Challenges
Digital Staffing Solutions
Warehouse Productivity

In warehousing, speed and reliability are everything. When demand spikes, most managers turn to temp agencies to fill shifts quickly. On the surface, this looks convenient, but beneath the hourly rate lies a range of hidden costs that eat into your bottom line. 

Let's break it down! 

1. Agency Margins

Traditional temp agencies often add a margin on top of a workers hourly rate. Sometimes, this can be as high as 15-20%. 

That means a portion of what you're paying, doesn't reach the contractor. For instance, if a candidates base rate is $30 per hour, and agency typically layers in annual leave, KiwiSaver, sick leave, plus a 15% margin. This brings the total to $42.30. 

How OMJ helps: Our smart app, is simple and transparent. As a marketplace, contractors work for themselves. We charge a flat $5 fee per hour. So that same candidate would receive $25 per hour, and you'd pay $30 in total. That's a difference of $7.30 per hour. 

Over just one week, that could save you circa $300 per temp contractor or over $15,000 per year (based on a 40 hour week, and 52 weeks a year). 

Either way, it's a win-win! 

Smiling warehouse workers preparing a shipment in a large warehouse-2

2. Hidden Admin Costs

1. Chasing agencies for timesheets, invoices and compliance paperwork eats into your teams time. 

2. Every step such as approvals, corrections and reconciliations is time your supervisors could be spending on the floor, not at their desk. 

3. Admin time equals labour cost, but it's often overlooked in staffing budgets. 

3. Lost Productivity

When workers are assigned by a temp agency, you have little choice and don't always get the right person for the role. Whilst it isn't always possible to ensure staff retention, having the right person is critical because it can lead to: 

1. Faster pick/pack rates

2. Less supervision required

3. Less errors in orders

Even a 10% dip in productivity per worker can add up to significant losses over the busy weeks. Using a temping app like OMJ, gives you more control on getting the same person again. 

 

Warehouse worker taking package in the shelf in a large warehouse in a large warehouse

4. The Cost of No Shows and Turnover

Recruitment agencies don't always guarantee reliability. When a shift isn't filled, the ripple effect can be huge!

1. Orders delayed

2. Overtime for existing staff

3. Frustrated customers

Each no show can cost more than the daily rate of the absent worker. 

 

5. The Compliance Risk

With multiple temp agencies, processes vary. Sometimes that can lead to slips with health and safety training and induction processes. 

A smarter alternative is digital temp staffing. 

Instead of relying on traditional agencies, digital staffing platforms like OMJ puts control back into your hands. 

Transparency: See exactly what workers are getting in hand through clear fee structures. 

Choice: Select from pre-verified candidates, rated by other employers.

Speed: Post a shift, get applicants quickly and confirm with a few clicks. 

Reliability: Built in ratings and ETAs reduce no-shows and boost accountability.

Efficiency: One platform manages shifts, compliance, timesheets, and invoicing.  

 

Portrait of manual worker and manager scanning package in the warehouse

The Bottom Line

The true cost of temp labour isn't just the hourly rate, its the hidden margins, admin drag, and lost productivity. By shifting from agencies to digital temp staffing, warehouses can cut costs, reduce headaches and keep operations running at peak efficiencies.