Lockdowns during the pandemic followed by increases in consumer demand resulted in shipping turmoil and skyrocketing prices. Shipping prices and consumer demand have since dropped; logistics and transportation companies are predicting a rapid decline. As the industry continues to work through these challenges, companies will have to navigate through an unusual peak season.
Peak season is when the logistics industry is normally expected to be at capacity, from November to January. However, in November this year, the average rate per mile for shipping by truckload was the lowest it has been since September 2020. Owner-operators are describing this year’s peak season as a ‘muted peak.’
The impact of a muted peak season is traveling quickly through the U.S. domestic supply chain; carriers have been cutting operational capacity. The largest freight broker by revenue, C.H. Robinson Worldwide Inc., laid off hundreds of workers after a recent hiring increase in response to pandemic-driven demand. “We certainly did not expect that the market was going to come down as rapidly as it did.” – C.H. Robinson Worldwide CEO, Bob Biesterfeld
It is important to be prepared for this underwhelming peak season. Brokers and carriers should remain cautious and stay productive and profitable, despite the slowdown. Here are a few helpful tips for the 2022 peak season & beyond:
- Be cautious when signing onto new warehouse capacity
The drop in available space is hopefully over.
Even Amazon.com Inc. is subleasing spare warehouse space.
- Use multiple carriers/vary your shipping options
- Keep the unpredictability of the past two years in mind when considering low rates for 2023
- Observe commodity markets
Prices of raw materials provide a guide for 2023 supply chain direction and costs.
