2023 Recap – Through the Lens of Supply Chain

As 2023 comes to a close, we look to the events that took place this year to help us prepare for bringing in the new year. Much like the last five years, 2023 brought significant challenges for the various players in our global supply chain — from labor strikes, continued port congestion and more — and kept everyone on their toes.

As a company, we made a conscious effort to keep supply chain resiliency as one of our main focuses this year. We kicked off our first-ever “Envision” thought leadership conference, where we explored the supply chain landscape going into 2030, 2050 and beyond, and if 2023 had one major influence, it was helping players prioritize resiliency moving forward.

Before we turn the page, let’s recap how 2023 treated shippers, truckers, rail, intermodal and the ocean industry. 

How did shippers and ocean freight fare in 2023?

Inventories saw little change vs. 2022, with retailers reporting higher volume than anticipated, causing a reduction in orders to help maintain levels. Carrier markets, both import and domestic, suffered from lower demand, bringing pricing to near 2019 levels.

Labor strikes took the spotlight this year and made ripples throughout our domestic and global supply chains. According to The Wall Street Journal, 2023 brought more than 354 strikes involving more than 492,000 workers. A notable one included a string of labor deals where UPS drivers, airline pilots and aerospace manufacturing employees pushed for higher pay and won.

E-commerce demand took a hit for midsize and small shippers with reported reductions in package volume. This is making it a “buyer’s market” for parcel services, creating changes in pricing and causing peak surcharges. 

Ocean didn’t experience much smooth sailing. Carrier earnings saw quite the decline in 2023, and weak trade volumes are expected to roll within the next year. Declining demand for ocean freight combined with increasing capacity drove container shipping rates down far below their pandemic peaks.

Trucking in 2023

Trucking in 2023 was interesting to say the least. According to CNBC, within the first four months of 2023, an astonishing 31,278 trucking companies either shut down or shifted their services to larger fleets due to falling freight spot rates and rising fuel costs.

Inflation depressed demand and contributed to reduced consumer spending and rate hikes, affecting the movement of all goods. This caused a shift for Americans, who are spending their money on services rather than goods. Shippers shifted their shipment modes to trucking vs. rail to avoid rail service issues, which has been increasing demand in the truckload market.

Overall, deceleration in retail sales, inventory levels that remain too high, and inflation have conspired to impact the trucking industry, with little short-term relief on the horizon.

Intermodal also saw some action

Interest rates, impending recession and ever-problematic inventory levels have had the most direct impact on intermodal volumes. However, as volume has dropped, the intermodal network improved cycle times for equipment and resolved capacity issues plaguing the industry just a year ago (even though demand has fallen). 

Intermodal’s share of the US market is still showing signs of damage caused by the post-pandemic disruptions. According to IANA, total intermodal volume in Q3 fell 7.1% YOY. Additionally, trailer volume fell 23.3%. Intermodal still has a way to go in order to regain its pre-pandemic share of the domestic long-haul trucking market in 2024.

2023 brought a lot of talk about innovation to intermodal operations, including EV and AV trucking. Though both seem promising, the challenge for the public and industry to adopt AV technology is hefty. In contrast, EV is more within reach.

Labor strikes struck the railroads

The railroads suffered a unique set of challenges in 2023, including global labor strikes and being under scrutiny for oversight on safety. However, rail proves to be the safest mode of transportation when considering keeping the transport of materials off the highways. Rail is also associated with the narrative of being behind the curve when it comes to investing in technology and enabling growth, but the future looks promising with the application of AI over the next few years.

However, with legislation requiring a two-man crew looming, rail cost would significantly change, along with competitiveness with pricing against trucking. 

As another year passes us by, we look to the growth and the pain points we’ve experienced throughout the year as learning experiences. From them, we adapt and respond to ensure we are producing technology solutions that help our customers achieve resiliency and enable agility into their supply chain processes. 

We are honored, once again, to have served our customers through this year and look forward to what 2024 has in store for all of us. 

Pervinder Johar is CEO at Blume Global.