Is 2023 going to be the year that the logistics sector returns to ‘normal’ which would be pre-pandemic norms? Many factors within the supply chain remain vulnerable to many external events such as the economy, inflation, fuel prices, and more. With so many external forces, predictions remain hard.
Impact of a Recession on Logistics in 2023
Many foresee the arrival of a recession. Economists feel certain of a shaky future in 2023. The Federal Reserve has injected a massive amount of money into the economy with treasuries and mortgage-backed securities which have all welcomed low-interest rates and greater prosperity which fed the inflation. However, with the interest rates increasing many believe things will start to tumble.
With higher-than-ever prices, consumers are starting to slow down and focus on discretionary spending which is lowering the supply chain volumes. Undoubtedly the coming year is going to be a lot softer for logistics.
Many wonders if trucking companies will start replacing their older tractors with fuel-efficient versions which could provide long-term savings across the board. However, many companies are reluctant to take such steps with a possible recession looming. They simply don’t want to replace their existing fleets. Interestingly, most trucking companies have not made any additions since 2018 despite record profits in the last few years.
Advances in Technology and Automation
Despite an uncertain future virtually, all logistics companies are taking steps toward data analytics and technology advances. Visionary tech brands are investing in new functions and capabilities to streamline processes. Ultimately, companies that invest in tech will receive a return on their investments in the form of greater efficiency
If the economy turns soft then some companies may not invest in new tech and automation which can impact their business functions and how they stand up against the competition.
Declining volume and prices can impact profits significantly which will cause new startups to falter. Startup valuations will start to plummet. Many startups are in fear of the coming year and have started to scramble to save money by laying off staff in the hopes of surviving. Many are even seeking merger opportunities.
The Outlook for 2023
Logistics companies believe they will face lower prices and softer volumes which will make it hard to exceed the previous year. However, the sector remains uncertain, and no one has a crystal ball. Economic and geopolitical uncertainty will likely cause even more upheaval for logistics in 2023
