Here we are into 2023! As we look at the year ahead of us, Paul Pfeiffer (CFO of Anderson Trucking Service) shares his insight on the new year’s industry forecast and what he believes we can expect. Though it’s always important to remain agile, evaluating factors that could potentially impact the trucking industry allows us to be proactive and plan accordingly in order to have the most successful year possible. In his video, we look into three things affecting industries across the board, how those impact the transportation industry, as well as a few ways to help you make the most out of 2023 as a freight agent.
Challenges We’ll Face
- Uncertain Economy: Because of the instability in the current economy, the FED is having to choose between fighting inflation and low unemployment rates.
- Consumers Changing Their Buying Patterns: With the shift in the economy, we are starting see buying patterns revert to pre-pandemic patterns. Meaning consumers are spending less money on goods that travel by highway and railroad, and spending more on services.
- Production Backlogs: Because of massive labor and parts shortages, many industries are experiencing higher backlogs than usual. Take the trucking industry for example—the demand for class 8 truck production is sky-high but labor and parts shortages are hindering the production of new trucks.
Impacts We Can Expect
Throughout the year we can expect something like what we saw in the back half of 2022, and as many economists have been predicting, we may see recessionary impacts kicking in midway through the year. So, what does this mean for the trucking industry in 2023? Let’s look at some key indicators like demand, supply, cost, and rates to see how the transportation industry may be affected.
- Demand: As the FED continues to fight inflation in the current economy, we can expect aggressive moves in interest rates to fight the current inflation. In addition to that, we predict that consumers themselves will reduce their spending due to increasing costs across all industries because of inflation.
- Supply: The supply constraints on class 8 truck production that we mentioned earlier in the article are expected to persist throughout the year. It’s predicted, for the third year in a row, that production won’t much more than replacement level trucks. We can expect the supply of available and reliable transportation will be an issue throughout the year.
- Cost: Because the lack of available and reliable trucks, we foresee the prices and maintenance cost of trucks to rise throughout 2023. As we see fuel prices coming down, we expect them to plateau but because of the lack of an independent energy policy, we are left susceptible to spikes in fuel prices due to global events.
- Rates: Spot rates should continue to stay low and contract rates will stay high enough to support the increases in cost that we’ve talked about. We do expect opportunity for lower contract rates when talking about high density and competitive freight lanes.
Tips for Shippers
Now that we have covered how the trucking industry may look throughout the year, what can you do as a shipper to ensure a successful 2023?
- Have a diverse pool of stable carriers and service providers. Having a wide range of carriers and service providers gives you a lot of options when it comes to finding the right transportation solution for your specific need.
- Find ways to improve your business. Whether you are looking for ways to improve business processes or seeing where you can get lower contract rates in highly competitive lanes, it’s always important to keep your eyes peeled for opportunities that can benefit both you and the customer.
- Communicate clearly with your providers. With the uncertainty we’ll see throughout 2023, it will be difficult to accurately forecast production, inventory, and many other factors. That’s why it is so important to have strong communication with your carriers and service providers about production volume and inventory levels to help you plan more precisely as an agent.
Like any year, you never know what it may bring! And while there will certainly be some uncertainties, our Sureway agents are equipped with the tools, knowledge, and experience to make 2023 another amazing year in the transportation industry. Interested in partnering with Sureway? Go to Sureway.com and click on “Become an Agent” or “Become a Carrier” to learn more about a partnership with Sureway Transportation!