PLAN AHEAD FOR 2023
SECURING CAPACITY
TO DO
OVERVIEW
Institute new long-haul strategies for the long term.
Supply chain and logistics teams are adjusting to decreased volumes and preparing to take advantage of the most potentially favorable market conditions we’ve seen in years. Spring will be prime time for logistics teams to renegotiate the contracts they struck with their air and ocean shipping partners at the beginning of the pandemic. For some companies, these agreements provided a sense of stability in an uncertain time even if the partnership turned out to be less than ideal. As the logistics market has steadied, many companies have taken advantage of spot bids and the cheaper shipping rates they bring. It will be competitive this spring for negotiating rates and shippers will start bidding for space earlier than ever. The on-time service levels should continue to increase across all modes of transport. The most notable decrease in service was the ocean mode, and as shipping lines reposition equipment in the right ports and lower volumes allow for carriers to focus on improving processes, we should see a healthy gain toward pre- pandemic on-time percentages. –Jeannie Carpenter, Logistics Director, Jabil
We will see air freight get closer to its pre-pandemic cost and rhythm in 2023 as demand has leveled o and capacity is increasing, which is a major cost driver. So is the time sensitivity for e-commerce logistics. –Chad Schofield, Co-Founder & Chief Digital O cer, BoxC Air freight recovery Shippers will begin to pare back their carrier partners in 2023. When capacity was tight and consumer demand was at an all-time high in late 2021, shippers expanded their carrier base, looking for anyone and everyone who could potentially help keep their freight moving. In 2023, shippers will respond to changes in economic conditions by issuing more formal bids and awarding freight to carriers in an eort to reduce costs. This will result in deeper partnerships with a smaller number of trusted carriers. –Mike Williams, Exec VP, Commercial & Logistics, ContainerPort Group PREDICTION Transportation and logistics is increasingly becoming a B2B2C or straight B2C business as manufacturers, distributors, and retailers try to get goods to customers at record speeds. The problem is that shippers carry too much inventory and carriers are at peak capacity right now. There are limitations in fleet sizes, too. The solution to current long-haul problems will be multifaceted. It will: • Improve utilization of available cargo space. • Search for and address even the smallest ineciencies. • Employ more predictive planning solutions. • Provide aggressive incentives and training programs to entice people to join the transportation and logistics workforce. • Find secondary ports, air cargo hubs, and tracking routes. • Rebalance the workforce and overall supply chain “working” schedule. Those who choose to maintain relationships with 3PLs and large shippers will become more collaborative. They will want to integrate those companies into their business review process and ask them to advise on major process changes. Some companies could find it more dicult to secure space in trailers and containers, and priority goods movement could go to the highest bidder. Companies will only tolerate cost surges for so much longer, though, especially if higher prices don’t translate into consistent on-time delivery. –Andre Luecht, Global Practice Lead – Transport & Logistics, Zebra Technologies Corporation
WHAT TO EXPECT
Transportation capacity will continue to be abundant for the rst half of 2023 as shipment volume remains at. Freight rates will continue to fall as the ratio of available trucks to available loads remains high. Bankruptcy and other exits from the industry will increase to eventually balance out capacity in Q4 2023 at the earliest, or as late as 2025 if consumer spending decreases signi cantly. –Matt Lawrence, CEO, Fox Logistics
NOTES
The key unknown factor that could impact transportation capacity is labor. The labor market is still very competitive, even with layoffs across various sectors, and labor union negotiations have the potential to cause abrupt disruptions to capacity and product ow. West Coast labor negotiations have yet to conclude, and the Teamsters contract negotiations begin mid-year; both of which could cause disruptions or backlogs impacting capacity. Even with the unknown factors ahead, logistics managers will be able to focus more on supply chain strategy and network resilience in 2023 as they spend less time battling for capacity. –Spencer Shute, Principal Consultant, Proxima
216 Inbound Logistics • January 2023
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