Taking a quick look at some year-to-date market trends and themes

While the calendar indicates that just about the first seven months of 2023 are officially in the books, this seems like as good of a time as any to take a quick look back at things on a year-to-date basis, as they relate to key supply chain, logistics, and freight transportation trends and themes. (Please note that this will not be all-encompassing, as I do have a word count, grin). 

For starters, organized labor has been front and center in 2023, especially in recent weeks, with very different outcomes, with UPS and the Teamsters coming to terms on a new tentative five-year deal, which is set to be ratified this month. And on a far more unfortunate note, this week’s shuttering of the near-100-year-old less-than-truckload carrier Yellow, a situation which many industry stakeholders had seen coming for more than a while, to say the least.

Looking at trucking in 2023, things are definitely not in peak form, it seems, with volumes running low, for the majority of the year, and capacity remaining loose, both far cries from the high-octane pandemic environment, when, for a while, it felt like Class 8 trucks were the only vehicles on the road, moving all the stuff we were ordering while stuck at home. Rates also plunged in tandem, as evidenced by spot market and contract pricing, too, with a decent amount of that being influenced by the inventory build-up over the course of 2022, with shippers ostensibly scrambling to get products over in order to avoid stockouts.

That has been evident over the course of 2023, with warehouses full and import numbers, especially earlier in the year, seeing heavy annual declines, albeit showing improvements (still down but “less worse”) in recent months.

That theme has also been seen in the consumer-heavy intermodal sectors, which have seen declines throughout 2023 and beyond. That was made clear in data from the AAR, for June, the most recent month for which data is available, that showed a 7.0% annual decline, down for the 16^th consecutive month.

Parcel and express delivery networks have also seen their fair share of ups and downs in 2023 as well. Like their counterparts in other modes, they have seen declines in package counts, due to things like reduced demand, inflation, and consumers shifting to services-based activities like going on vacation (where your writer will be headed tomorrow), going to movies, out to dinner, and many other fun activities, which take disposable income away from goods spending, of course.

For the parcel duopoly of UPS and FedEx, even they have felt the pain of lower demand, but they have managed to persevere where their smaller and less-established competitors have not, in the form of pricing power, or, rather, the term typically used on their earnings calls: yield management.

What happens over the remainder of the year remains to be seen, but many stakeholders feel that the coming months are likely to be more of the same, or uneven, with the hope, and expectation that things return to a more normalized pace and cadence in 2024.

But as we all know in supply chain, logistics, and freight transportation, nothing really is for certain, given how exposed our sectors are to so many different factors, like weather events, financial meltdowns, war, energy crises, civil unrest, and various other things.

In order to not leave things on a depressing note, it is key to remember, as always, that people in our sectors on the front lines are among the ones that are heavily counted on to keep things, well, moving, in both good times and bad. If we learned anything from the pandemic, it is that the term “supply chain resilience” is far more than a fad or a buzzword, it carries a lot of weight and showed “everyone else,” just how crucial of a sector it is, no question.

Stay tuned over the balance of 20233, it looks like it will be an interesting ride.