The first quarter of 2023 is in the books, and industry reports are offering shippers and transportation providers mixed signals about the state of the North American logistics market. Shippers are still grappling with overstocked warehouses and store shelves, indicating that consumers are practicing caution amidst widespread inflation on essential foodstuff. When a loaf of bread costs the same as a tank of gas, consumers are obviously worried about their own financial budgets and are less likely to have disposable income to spend on other products. Despite the economic uncertainty, a recent report indicated that U.S. imports in March increased but were still down almost 30% from 2022. And the increase in U.S. imported containerized shipments does not indicate an equal distribution of market success. The same report shows that East Coast terminals actually experienced a loss of volume, with the ports of Savannah, New York, New Jersey, and Charleston all reporting a significant drop in container imports.
Meanwhile, TD Cowen/AFS recently released a report that casts further uncertainties about the current state of the logistics marketplace. The report highlighted flagging consumer spending and the Fed’s efforts to curb inflation with their recent rate increase in March 2023. Of interest was the drastic decrease in the Truckload average Linehaul Cost Per Shipment, which saw a 13.8% drop quarter over quarter, the first negative report change since Q3 of 2020. As highlighted by FreightWaves, most shippers are increasing short-haul shipments, suggesting that shippers are pulling from local and regional suppliers and not paying for more expensive long hauls because they aren’t desperate for inventory. Here, too, inflation seems to be an underlying problem.
Inflation also increases labor, materials, and fuel costs, making it more expensive for companies to manufacture and store products. These additional pressures negatively impact profit margins. As a result, more shippers are partnering with transportation service providers that specialize in optimizing supply chains. Companies like Wicker Park Logistics offer customers technology that can automate time-consuming manual processes, help optimize shipping lanes, and provide real-time visibility over the entire supply chain.
Looking back on logistics forecasts and reports published last year, we can read that trade experts were correct in predicting some of the market realities of the logistics industry in 2023. Last year, for example, The Council of Supply Chain Management Professionals predicted freight volume over land, air, and sea would decline steeply in 2023, and that shipping rates would drop precipitously from the pandemic levels.
Shipping volumes are typically slow in Q1 following the holiday spending spree. But with the continued effects of the global financial recession, Covid, foreign military conflict, and U.S. economic inflation, most shipping professionals remain uncertain about \the rest of 2023. Container xChange recently surveyed over 600 supply chain professionals asking whether they thought peak shipping season would be better in 2023 than the year before, of which 48% of respondents answered with “Yes” and 42% with “No.” Christian Roeloffs, the CEO of Container xChange, said, “As we look ahead, we anticipate a subdued rebound in demand as retailers begin to deplete their excess stock in the coming months, leading up to the peak season.”
With Economic Uncertainties, Shippers Find Stability with Wicker Park Logistics
The logistics industry is cautiously optimistic that conditions will improve for the rest of 2023. Despite these economic challenges, shippers still need to source quality year-round capacity, want their loads delivered to their customers on time, and want visibility over their supply chain. That’s why more shippers are turning to Wicker Park Logistics in 2023. Wicker Park Logistics provides a level of transparency with its customers. Using advanced data analytics, Wicker Park Logistics helps shippers optimize their lanes, build resilient capacity density, and provides technology that provides customers with tools to lower their overall transportation costs. For 2023, get prepared for peak shipping season by contacting an expert at Wicker Park Logistics today!