What to Expect in the Coming Year?
Forecasts show 2023 as an opportunity for Shippers to contract lower rates across the board. 2022 was a pivotal year seeing the end of hyper inflated consumer demand coupled with capacity shortages. Reduced transportation labor force due to covid, congested corridors and equipment shortages with lower service reliability were the norms in 2022. In 2023, we will see the economy recess and truck driver demand will plummet throughout 2023 from this anticipated slow-down. All this is welcome news for shippers who can expect lower rates and better service through a structured selection process.
2022 saw ocean container rates plunge 80%. 2023 should see a modest increase of 10% from the historic low rates seen at the beginning of 2023. There may be another whiplash uptick as Ocean carriers continue to take ships off-line and blank sail. The best way to secure the lower rates is to enter into a contract. Additionally, since congestion has cleared, carriers will be able to negotiate more favorable terms to mitigate penalty charges. Contracts are effective from the beginning of May, so the time is now to conduct and conclude a bid process.
May 2023 Update: Ocean rates have increased 15% from the lowest point of 2023, however, earlier this month rates fell 11% and are trending back downward. This will continue to slide until the rock bottom price of $1,100 per container is reached.
2022 saw the inflated Pacific Rim Origin rates remain elevated due to COVID constraining lift and airplane capacity. Late 2022, this reversed, and we are seeing capacity returning to pre-pandemic levels and rates have fallen back to those levels. Like Ocean freight, this could whiplash with a COVID break-out, or operational snafus. Air Freight rates should increase at a negligible amount, less than 5%, but with a bid process, rates can fall further as competition amongst forwarders is fierce for good base load volumes for consolidations. The best way to secure the lower rates is to enter into a contract after a structured selection process.
May 2023 Update: Air Freight rates and Jet Kerosene fuel have continued to drop and capacity is increasing steadily with COVID-19 restrictions being lifted and more commercial aircraft flying. Rates have fallen 10% from the beginning of the year and this trend will continue for the rest of 2023.
2022 saw the flattening and reduction of spot rates. Contract rates saw reductions as well. The peak season never materialized and cost per mile rates remained flat and dipped down further in later quarters. Truck rates should fall further, 7.5% as the demand for this service will fall further with the recession and retailer’s bloated inventories. The best way to secure the lower rates is to enter into a contract after a structured selection process.
May 2023 Update: Full Truckload rates and diesel fuel have continued to drop. Load tender rejections have fallen to historic low levels which will drive spot quote rates down. We have seen first-hand the increased competition for contract rates. Rates have dropped 12% since the beginning of the year.
Less-than Truck Load
In 2022, capacity returned to this mode and we saw rates fall from historic increases in 2021. Average increases in 2021 were 12% and in 2022 it dropped to 7%. In 2023 we see an opportunity to drastically reduce costs, 15%, through conducting a competitive bid using CPC’s proven disruption methods.
May 2023 Update: Less-than Truckload rates and diesel fuel have continued to drop. We have seen first-hand the increased competition for contract rates and market share with certain carriers. Rates have dropped 15% since the beginning of 2023.
See the recent blog about the 2023 rate increases by UPS and FedEx, and what a shipper can obtain with agreements, discounts, and incentives.
May 2023 Update: FedEx is combining Express and Ground Networks into one and this move will benefit the Shipper with processing shipments. Demand is down significantly with the recession, however, the oligopoly of FedEx and UPS is holding firm on their yearly increases. The best way to lower parcel costs is the elimination of accessorial fees and dimensional charges. CPC has specialized tools and expertise in this area.
How CPC Can Help
CPC has the proven expertise and specific industry knowledge in international air freight that drives efficiencies. Let CPC perform a free diagnostic to ensure you have the best transportation program as we surgically find the improvements and savings that are available. There is no obligation to hire us, but we believe this is a totally unique time as rates trend up in the marketplace to stop profit leaks and add incremental cash flow to your bottom-line. Call CPC to tap into our shipping expertise that generates guaranteed savings.