Economic conditions and a heightened need for technology investment were key themes at this week’s SMC3 JumpStart conference, an annual supply chain event that brings together carriers, shippers, logistics services providers, and technology companies to discuss the latest trends and challenges in the less-than-truckload (LTL) freight market. More than 600 people turned out for this year’s event, held January 23-25 in Atlanta.
Economists and industry leaders said a weakened freight environment that began last year will persist through the first half of this year, weighed down by uncertain macroeconomic conditions that may further dampen the U.S. and global economies. Bob Costello, chief economist for the American Trucking Associations (ATA), said during a panel discussion that the U.S. economy may be headed toward a recession later this year, but that he expects it to be short and mild. With freight markets already falling, he and other panelists said the industry will likely be among the first to recover, however. Some business leaders said freight conditions may improve in the second half of 2023, when retailers and brands begin to replenish depleted inventories, for example.
“Because we saw this early, [we] should see a recovery earlier,” Costello said.
The panel also said the slower pace of industry conditions represents a “settling back” following the rapid growth the logistics industry experienced from mid 2020 through mid 2022, driven by hyper-accelerated e-commerce growth—a trend they agreed has slowed down but they said will not reverse, and will therefore continue to drive demand for logistics services.
A slower year ahead represents an opportunity for investment–especially in technology, according to conference speaker Renee Krug, CEO of supply chain software company Transflo. She advised attendees to focus on investing in back-office automation and customer-facing technologies that can help scale businesses for growth when conditions improve. She pointed to logistics investments by large retailers such as Amazon, WalMart, and BestBuy as examples: Amazon and WalMart are testing drone delivery in certain U.S. markets, and BestBuy has invested heavily in e-commerce capabilities, turning their stores into mini-fulfillment centers to meet demand for delivery and local pick up.
Trucking and logistics businesses should likewise examine their own operations for ways to improve and prepare for growth, she said.
The year ahead will be a “quieter year and a chance to get a lot done,” Krug said, adding that companies of all kinds are putting a sharper focus on freight and logistics in the wake of supply chain challenges that arose from the pandemic—another reason for logistics companies to be optimistic.
“Freight is really an important part of every executive’s strategy,” she said, adding that companies care about logistics more than ever and are focused on finding ways to improve their supply chains.
Victoria Kickham started her career as a newspaper reporter in the Boston area before moving into B2B journalism. She has covered manufacturing, distribution and supply chain issues for a variety of publications in the industrial and electronics sectors, and now writes about everything from forklift batteries to omnichannel business trends for DC Velocity.