2023 Market Outlook – Transportation Management

2023 Market Outlook – Transportation Management

Time Stamp: April 1, 2023 12:00 AM
Source Node: 2557637

Transportation chaos and unprecedented rate increases characterized the COVID-19 marketplace. Many of those conditions are beginning to abate but cargo markets will begin to heat up again in 2023. Outsourcing transportation management to an experienced third-party logistics provider such as GEODIS helps smooth the rough edges of market volatility.

In 2022, ocean transportation conditions eased as volumes and rates dropped. Shippers that entered into annual contracts with carriers at higher rates are now paying above spot-market rates. In domestic trucking markets, COVID strained trucking capacity, and rates increased significantly. Those situations began to normalize in the second half of 2022, with spot market TL rates dropping 25% and contract rates decreasing 20%. In air cargo, capacity was removed from the market when the pandemic hit, leading to rate increases. 

Passenger aircraft capacity remains lower than pre-pandemic levels and air-freight rates remain elevated. Large importers negotiate contracts with their carriers in the first quarter of the year, a development smaller shippers should be eyeing since rates are expected to drop. Once large shippers establish a floor, smaller cargo owners can contract with carriers based on those benchmarks. Until a new floor is established, GEODIS advises that shippers are better off moving under current spot-market rates. 

In the trucking market, GEODIS suggests bidding contracts out more frequently than annually. This can also mean leveraging longtime relationships with providers to reduce rates to market levels without the time required for a full bid. These efforts require robust transportation management experience and expertise, capabilities that GEODIS brings to the table. In the truckload market, bidding opportunities for shippers have already opened up in the first part of 2023. Less-than-truckload will see less downward pressure on rates, making single-digit savings a realistic expectation from upcoming contract bidding processes. 

As transportation markets normalize in 2023, stakeholders can refocus on making supply chains efficient and responsive. The pandemic taught that end-to-end visibility was critical to supply chain management and the same will hold true to achieving supply chain success going forward.

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