The last couple of years have been brutal on the logistics industry. While there was a whole slew of both anecdotal and recurring issues experienced in the industry, one of the most prominent challenges was simply the fact that the industry was (and remains) so volatile. Every time one issue is solved, another arises.
It’s easy to get hung up on the issues caused by the ever-changing nature of the industry, but the truth is, it works in the opposite way as well. While new issues arise, so do solutions, and those solutions often propel us closer to a future of logistics defined by visibility and technological advancements.
So with that in mind, here are a few predictions for logistics in 2023 and what the future holds for domestic and international supply chains:
Supply Chain Predictive Analysis
Visibility is a buzz word in the industry. All of us are guilty of throwing it around far too often, and it’s certainly created a “boy who cried wolf” situation. Every carrier claims to have the greatest visibility, but at the end of the day, much of the technology surrounding visibility and real-time insights to cargo whereabouts has remained the same. This has only recently begun to change.
As AI continues to advance and technology – both in the warehouse and onboard trucks – evolves, real-time insights and updates to all relevant parties are becoming a reality. This is essential for businesses who staff and operate their facilities based on expected arrivals. If a truck is going to be delayed, this visibility and updates can allow warehouses to change their staffing and operations for the day.
Freight Rates Continue to Drop
We haven’t seen pre-pandemic freight rates yet, but prices have continued to lower over the last several months, and it appears as though the trend will continue through this year. Supply and demand have been unbalanced for a long time, but as they have leveled out with new trucks entering the market and pandemic-level consumer demand is dropping, we’re seeing freight rates follow the same trend.
In addition to the role that supply and demand plays, the other issue is with freight rates has been the price of diesel. However, it appears as though the short stint of high gas and diesel prices is waning as rates continue to drop through the first few weeks of this year.
Carriers Closing Operations
Right before the pandemic, several domestic carriers were closing operations due to an overly aggressive competitive market. Fleets expanded rapidly the year before during a trucking boom. However, that trucking boom paled in comparison to what was seen in the middle of the pandemic when the industry started working overtime. This will likely result in carrier bankruptcies and closures when combined with the dip in freight rates, as many “barely-surviving” carriers will be forced into a price war that they can’t win.
Conclusion
This year’s logistics market will be defined predominantly by the increase in technological advancement and visibility, as well as rebounds from the lingering effects of the pandemic and its impact on the global supply chain. The thing that shippers need to do now is to remain observant and adaptive, as these rapid changes in freight fleets, capacity, rates, and route options can make or break a company’s shipping processes.
If you or your team have any questions about the changing shipping market and how your team can remain effective and adaptive through the beginning of this year, please don’t hesitate to reach out to one of our team members! We would love to help by answering any questions we can.