After
emerging from the global pandemic, the logistics industry is facing new
challenges. The year 2022 couldn’t outperform 2019 for the logistics
companies and trucking industry. As a result, there is a big fall in
freight demand in December 2022.
Currently, the Outbound Tender
Volume Index (OTVI) and Contract Load Accepted Volumes (CLAV) have
decreased. On an average, the OTVI fell by 2.7% on a week-over-week w/w
basis and 27.6% on a y/y basis. And CLAV has witnessed a dip of 2.7% w/w
and 14.8% y/y.
In
December 2022, Ocean Imports also faced of the highest contraction in
its history. In addition, shippers are giving fewer contracts to
carriers, which is affecting the truckload volume negatively.
At
the time of the Lunar New Year, the absence of an increase in domestic
manufacturing will further deteriorate truck volumes into 2023.
Disruption
in the global supply chain and port congestions are the current issues
for the trucking industry and shippers of all sizes. But small business bookkeeping services have been trying to help this industry. Let’s find about the most common challenges the logistics industry can face in 2023:
As
per OTRI, the rejection rate is below 4 percent since late November.
The tender rejections index tells the percentage of contracted loads
rejected by trucking companies. A declining rejection rate reflects that
carriers (the trucking industry) are losing the pricing power.
With
no major incentives left for a carrier, it makes no difference whether a
trucking company rejects4-in-100 contracted loads versus 6-in-100. Out
of 135 total markets, only 35 reported weekly increases in tender
volume. All this is due to the downfall in freight demand.
If
the current situation of rejection rates holds through the first
quarter of 2023, shippers will have the advantage. It gives shippers a
chance to secure carrier capacity at cheap rates. Moreover,
suppliers/shippers are taking control of their supply chain by moving
truckload fleets in-house.
Small-scale
carriers and brokerages are suffering the most from the downturn of the
supply chain. This leaves them vulnerable to acquisitions in 2023.
Large carriers are acquiring smaller carriers, and 3PLs are merging with
3PLs. In simple words, a trend of "cross-pollination" is booming.
However,
the results of these mergers and acquisitions are uncertain, especially
if the deals close during an industry recession. One of the major
considerations of such deals is earnings and growth potential in 2023.
Digitization
in the logistics and trucking industry is expected to increase in 2023.
This will allow companies to mine data for valuable insights and to
accelerate intelligent decision-making. So, in the coming year, data
analytics and intelligence will be two of the biggest challenges for
shippers.
In 2023, the rise in digitization will keep soaring.
It’ll become even faster and more advance. This is why trucking
companies and shippers need to update their skills and freight accounting management to beat the competition in 2023.
With
more people getting aware of the impact of diesel or petrol on the
environment, demand for sustainable vehicles is increasing. Consumer
pressure to bring down pollution motivates the logistics industry to
reconfigure and invest in green infrastructure and electric fleets. This
trend is expecting to continue in the coming year.
According
to a report by Descartes, there is a 12% down in imports m/m and 19.4%
y/y. Imports typically declined in November 2022 as compared to October
2022.
A
decrease in exports from China is the main reason behind lower US port
numbers. The U.S.imports from China dropped by 11.1% in November 2022
versus October. In addition to China, import source declines were
widespread, pointing more toward weakening demand.
According to
Descartes's data, there is a 30.8% m/m drop in imports from Thailand and
a 17.4% drop in Vietnam. Imports also fell from countries like Taiwan,
Germany, Hong Kong, Italy, South Korea, and India.
Various
sources have published about the US import data, including Descartes,
PIERS, the McCown Report, Panjiva, Port Tracker and more. Each of them
comes up with different percentages of totals and changes. Some use
customs data, while others use port counts. The McCown Report covers the
top 10 ports. The NRF covers 12. Descartes, PIERS and Panjiva cover all
ports.
According
to Descartes, the fall in countrywide imports since the peak has been
heavily weighted toward West Coast ports. Also, the import volumes in
California fell 15.4% m/m in Long Beach, 14.5% in Oakland, and 7% in Los
Angeles. There is also a decline in the East and Gulf Coast ports.
Not all ports are experiencing a decline in shipping. Some ports in the US are handling more shipping. Let’s take a look:
GPA
Executive Director Griff Lynch said that the Port of Savannah is the
second-busiest port in the month of October 2022. He further said that
customers were continuously bringing new business to the Port of
Savannah that links Savannah to major US markets. One hundred sixty
importers (new or existing) grew their Savannah trade by 20% or more.
This port continues to outperform irrespective of the recession time or
downfall in demands.
The
monthly crude oil export also increased at the Port of Corpus Christi
on Texas's Gulf Coast in October 2022. This growth resulted from the
huge export of US-produced crude oil to Western European buyers who
rejected the Russian crude imports. Also, it is estimated that
additional tonnage records have been achieved this year in renewable
energy components like windmills through the Port of Corpus Christi.
However, the new year also brings new opportunities in the supply chain. Because businesses will shift from reactive to proactive and from survival mode to growth mode. In this phase, tax resolution services California can support businesses in this industry.
Original Source: https://bityl.co/H3dS