In today’s fast-paced supply chain environment, it is important to know and understand the trends most likely to shape the future. To help you navigate the constant and transformative changes moving today’s supply chain, our Transportation Quarterly Report highlights what to watch each quarter. The data referenced is pulled from reports from DGF, Morgan Stanley, FTR, Sonar, Cleveland Research and Xeneta.
Top Three Trends Worth Noting for Q2 2023
Overall spot market rates continued to normalize in Q2 against the high rates of last year. Most analysts, along with 70% of carriers and brokers, anticipate the floor will be reached sometime in H1 2023.
Air freight rates are returning to pre-COVID level, with overall scheduled capacity remaining sufficient to support current low demand volumes. Ocean rates continue to decline as demand softens, while truckload rates continue to drop with a healthy spot to contract gap. With all modes, we are seeing heavy RFP and repricing efforts underway.
While recruiting and keeping qualified workers continue to challenge the nation’s supply chains, a number of ongoing labor negotiation issues showed how vulnerable our supply networks can still be. This included ongoing negotiations between UPS and the teamsters union before an August 1st deadline, as well as the continued work disruptions at Canadian ports being caused by stalled contract negotiations.
There was also the ongoing union demands and contract renegotiations hindering the restructuring efforts of Yellow Corp. One of the nation’s largest less-than-truckload (LTL) carriers, Yellow has been struggling with debt and management issues for a few years. The intense negotiations over restructuring efforts to boost efficiency appear to be intensifying the situation. Given the timing, if Yellow ultimately files for bankruptcy it will have a large impact to service, capacity and costs for LTL in the short term. We will continue to monitor the situation in our Q3 update.
With key measures keeping the economy in the green, chances the U.S. will avoid a recession are slightly increasing. For instance, Goldman Sachs lowered to 25% the chances that the U.S. will enter a recession in the next year.
One reason for the optimism from analysts is the continuing strong job report. The U.S. economy added 253,000 jobs in April and 339,000 jobs in May, bringing us to the 29th consecutive month of job growth. This higher than job report will continue to prop up consumer spending. Another factor is that even while efforts to lower inflation continue, retail, motor vehicle and building supplies sales were all up. Additionally, single-family housing starts in may were at a rate of 997,000, 18.5% above the revised April rate.
Economic Outlook
For more information on how DHL Supply Chain can help you overcome your transport challenges, while maintaining high levels of service, reliability and supply chain visibility, visit our Transport Solutions content hub.
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Source: freightwaves - Transportation Quarterly Report Q2 2023
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