As the year 2022 comes to an end with container imports returning to the levels of the year 2019. Ocean shipping rates have declined and the modes of capacity have increased manifolds, there is a thought that 2023 won’t be as challenging as the previous years. However, this thought is farce. The pressure is on transportation organizations to deliver better performance at low costs even if there are resource shortages. Let us now take a look at what are the transportation trends in 2023:
Decreasing Transportation Costs
Although there is a decrease in transportation costs, the shippers are more focused on the transportation costs because of the rising inflation and an increase in prices in the commodities. As there is a soft demand for transportation costs, the logistics service providers will take advantage of market capacities. There will be more bidding to help reduce the rates. Moreover, they will move to less expensive transportation methods so that there is no impact on the business performance. From sourcing, tracking automation to rate shopping, shippers help reset strategies in response to the changing market conditions.
Differences in Service
Transportation service levels were impacted during the last several years damaging the relations of shippers with the customers. The shippers will ask the carriers to manage their costs, while focusing more on service performance. They will readily pay a premium price for service performance. Shippers will focus on digital service capabilities as the customers demand greater visibility and the ability to control shipments in transition.
As companies work to make their supply chains resilient, transportation organizations will become more agile and increase transportation diversity to minimize the impact of disruptions or take advantage of the transportation conditions. Supply chain lead times could reduce transit costs. It is also important to work with carriers across different modes of transportation lanes to reduce the risk of disruptions.
There is a major economic labor problem since the covid pandemic. There are not many people entering the workforce to fill open job positions while boomers are accelerating. There is a record low level of unemployment rates. In the logistics industry, the problem is that the competition is not between competing companies but it is with every kind of company. Retention and hiring reduction strategies will be best to utilize the drivers that companies have. Retention of drivers is a great challenge which can be minimized by providing feasible delivery routes, lesser waiting times and using advanced technology to help them through disruptions that result in daily challenges in keeping drivers. During the peak seasons, the available driver’s pool is tight so it is important to improve the productivity of drivers and meet the demands of customers.
Sustainability is the key
Sustainability is a key factor when it comes to managing the transportation business. Customers wish to know which delivery options are the best sustainable options. They would like to track the carbon footprint. With great consumer awareness providing sustainable delivery options it is an important strategy for improving the experience of customers. Since providing sustainable delivery options will not only be an important strategy for enhancing the customer experience but also act as a financial opportunity to reduce the transportation costs. There are other environmentally friendly delivery options that are not only efficient but measure less carbon footprint across the supply chain.
Transportation organizations will evaluate whether they were enabler or an inhibitor. Were they agile enough to find solutions that most companies faced. Transportation management in 2023 will be the time when transportation organizations will replace the solutions that support more resilient options.
The greatest challenge for transportation in 2023 is a battle that lets the cost and service keep under control. It not only helps address labor challenges and create a positive impact on the environment by offering sustainable options. It also helps rethink strategies and tactics and determine if the technology solutions will determine the organization’s new vision and strategies. It also means that in order to be an impactful part of the enterprise an outward view is required to leverage the transportation management capabilities across various organizations.