{"id":72934,"date":"2023-08-22T00:00:00","date_gmt":"2023-08-22T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/logistics\/2023\/08\/22\/the-global-logistics-market-is-experiencing-a-reset-as-carriers-lose-the-high-ground\/"},"modified":"2023-08-22T00:00:00","modified_gmt":"2023-08-22T00:00:00","slug":"the-global-logistics-market-is-experiencing-a-reset-as-carriers-lose-the-high-ground","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/logistics\/2023\/08\/22\/the-global-logistics-market-is-experiencing-a-reset-as-carriers-lose-the-high-ground\/","title":{"rendered":"The global logistics market is experiencing a \u201creset\u201d as carriers lose the high ground"},"content":{"rendered":"

Shippers are gaining more high ground amid weak market conditions for carriers <\/strong> : <\/strong> Following two years that saw shippers \u2014 companies supplying goods for shipping \u2014 contend with delays and surcharges while carriers raked in massive gains on the back of shortages, bottlenecks, and demand spikes during the pandemic, \u201cthe proverbial shoe is now very much on the other foot,\u201d according to Kearney\u2019s State of Logistics Report for 2022 (pdf)<\/a>. <\/p>\n

The past year has been about the logistics market \u201cgetting back in sync\u201d <\/strong>after a volatile couple of years spurred by the onset of the pandemic, the report says, adding that this rebalance of demand, capacity, rates, volumes, and strategic relationships has taken different forms for different sectors. The one unifying trend? Resilience and agility need to be top of mind for all logistics players, according to Kearney. <\/p>\n

Shippers are pivoting to better terms with carriers: <\/strong> The pandemic saw many carriers take liberties in terms of their agreements, with shippers bearing the brunt of delays and overcost. Shippers are now finding new ways to negotiate better contract terms with carriers, including launching bidding processes, leveraging market events, and agreeing shorter-term contracts with carriers, Kearney explains. <\/p>\n

They\u2019re also shifting towards reshoring: <\/strong> American and Western outfits are pushing to reposition their supply chains onto closer and friendlier shores in order to build-in supply chain resilience that can weather geopolitical crises, with the trend having nuanced repercussions on the logistics market, Kearney explains. The trend is also gaining traction in the MENA region, as we\u2019ve reported earlier.<\/p>\n

But it\u2019s not all positive on shippers\u2019 side: <\/strong>Sluggish growth in the global economy implies muted supply chain demand for the remainder of 2023, the report explains. Lingering inflation in particular is expected to weigh on consumer demand with a knock-on effect on the demand for logistics services. Geopolitical tensions also mean that the world is seeing a comeback of forces threatening global trade, \u201cforces such as nationalism, protectionism, and even major-power conflict,\u201d Kearney\u2019s report writes.<\/p>\n

Air freight in particular is having a rough year: <\/strong>Global air freight is projected to haul in USD 150 bn in revenues in 2023, according to Kearney. While still 50% higher than pre-Covid revenues, the forecast is 25% lower than in 2022, when air cargo was still benefiting from record rates earlier in the year. After peaking in 2021, air freight took a sharp downturn in Q2 2022 and has been in decline ever since on the back of a mismatch between capacity and demand, the report says.<\/p>\n

This is exacerbated by the trend towards regionalization: <\/strong>As nearshoring arrangements come online, the report sees overall declines in air freight demand. However, \u201cnot all reshoring strategies are created equal,\u201d the report adds, implying that effects on air freight could be more nuanced. <\/p>\n

Much like air freight, demand for maritime freight is tapering off: <\/strong>Kearney sees maritime shipping companies raking in just USD 43 bn in income by year\u2019s end, marking an 80% y-o-y decline. This comes on the back of weak consumer demand, shorter transit times and a glut in capacity, which has reduced carriers\u2019 bargaining positions. These changing dynamics have allowed shippers to renegotiate rates in their favor, making for a muted \u201cpeak\u201d summer season<\/a>.<\/p>\n

After falling into the same oversupply trap as air freight, ocean carriers are trying to think <\/strong> out-of-the-box <\/strong>by re-evaluating alliances and expanding into larger portions of the value chain as a means to realize competitive advantages. A focus on end-to-end solutions and premium freight services offer additional avenues for differentiation, Kearney\u2019s report suggests. <\/p>\n

Parcel and last mile is also expected to be strongly affected by flattening e-commerce <\/strong> growth later this year or early next year, <\/strong>due to inflation, economic slowdown, and a return to in-store shopping, the report said. Nonetheless, parcel volumes are not projected to decline in the coming years with premium services such as same-day delivery expected to almost double in market size to USD 14 bn between 2023 and 2028.<\/p>\n","protected":false},"excerpt":{"rendered":"

Air freight and maritime shipping firms are in for a reckoning amid weakening demand and a global \u201creset\u201d in trade flows<\/p>\n","protected":false},"author":1,"featured_media":72935,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"newspack_ads_suppress_ads":false,"newspack_popups_has_disabled_popups":false,"newspack_sponsor_sponsorship_scope":"","newspack_sponsor_native_byline_display":"inherit","newspack_sponsor_native_category_display":"inherit","newspack_sponsor_underwriter_style":"inherit","newspack_sponsor_underwriter_placement":"inherit","ep_exclude_from_search":false,"_primary_brand":0,"newspack_featured_image_position":"","newspack_post_subtitle":"","newspack_article_summary_title":"Overview:","newspack_article_summary":"","newspack_hide_updated_date":false,"newspack_show_updated_date":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[255],"tags":[17,25,123,66,254],"brand":[],"newspack_spnsrs_tax":[],"class_list":["post-72934","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-the-macro-picture","tag-enterprise-logistics","tag-logistics","tag-shipping-maritime","tag-supply-chain","tag-the-macro-picture","wpautop","entry"],"acf":{"mongo_id":"a4e93ee1-7c71-4994-b8e3-3f11b12eceb8","is_powered_by":false,"story_type":"1","photo_url":"https:\/\/ent.news\/2023\/8\/162.jpg","photo_position":"above","homepage_title":"","full_issue_title":"The 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