A new report from Container xChange has found that a majority of supply chain leaders it surveyed fear inflation and that the recession will negatively impact the shipping and supply chain industry in 2023.
The report said 88 percent of the respondents to the Container LogTech predictions report think inflation and recession will impede business in the coming year. Respondents also felt “implications of war” (57 percent), “the impact of COVID in China” (53 percent), and “worker strikes” (23 percent) were also concerns going into 2023.
“The overall outlook for the year 2023 remains gloomy. Europe is hit hard with all-time high inflation; China struggles to cope with the virus, and the U.S. continues to witness hinterland transportation challenges and labor unrest. Most of these challenges will stay in 2023. Consumer confidence will pick up, but it really depends on whether we witness more disruptions in the coming times.” said Christian Roeloffs, cofounder and CEO of Container xChange, an online container logistics platform.
A majority of the respondents said they predict container rates and contract rates will fall further in 2023, the report said. Trucking rates for both dry and reefer cargo will continue to drop this year, while freight tonnage will continue to contract as the market and volumes return to pre-pandemic levels.
Long-term shipping contracts will see an uptick in 2023, the report noted. Negotiations will bring contract rates in line with spot rates, experts said. But forwarders will favor short-term contracts until rates stabilize.
“Freight forwarders will employ a ‘wait and see’ approach before making any long-term air cargo capacity commitments particularly.” the report said.
Additionally, experts expect worker strikes are in store for this year. Unresolved strikes from last year will spill over into this year, the report said, and the chances of new strikes due to inflation-related pressures on workers are high. Any labor dissatisfaction in Europe and the North American economies could cause global supply chain disruptions.
‘‘Due to inflation increasing, there’ll be more unrest in the labor market which will certainly lead to more strikes, specifically in Europe, the UK, and North America,” said Aamir S. Mir, chief operating officer of Caspian Container Company SA. “And as we have seen before, strikes result in slow operations within the port which can exacerbate supply issues.’’