What to expect in 2023 - 4 key trends in freight forwarding

After almost three years of unprecedented supply chain disruptions, 2023 will bring its own unique set of challenges and opportunities. The effects of the COVID-19 pandemic, the rising cost of living, and geopolitical unrest can be expected to ripple into 2023. The worst of the congestion that has plagued logistics is easing, but new issues are emerging along with possibilities for growth. What the last few years have made clear is that being prepared is key to survive and thrive, whatever the circumstances.

As those in the freight forwarding industry finalise their strategies for 2023, here are some key trends to watch out and prepare for in the coming year.

1. The unexpected becomes expected

The black swan events that came in flocks in 2022 reinforced the importance of flexible and resilient supply chains for the freight forwarding industry. These random, unexpected events can have a huge, disruptive effect on supply chains. From the continued effects of the COVID-19 pandemic to the Suez Canal obstruction and the war in Ukraine, supply chains were repeatedly tested in the past few years. Additional challenges for the freight market included staffing shortages, capacity issues, inflation, and demand peaks.

More than ever, supply chains are subject to varied and unpredictable challenges and issues. 2023 will be no different and the need for both domestic and international freight forwarders to ensure they are resilient and ready for anything, has never been greater. Agility, flexibility, and visibility – often facilitated by digitalisation - are all key to riding out a storm. With the right technology and ability to collect and analyse data, freight forwarders can improve efficiency. They are also better equipped to capitalise on opportunities outside of periods of disruption. According to a McKinsey survey, 90% of supply chain leaders reported investing in digital supply chain management technology since 2021, with 80% expecting to continue to invest in 2023 and beyond, often to support advanced planning.

2. Economic uncertainty and the rise of protectionism

With geopolitical conditions and rising inflation, 2023 is widely tipped to bring a slowdown in economic activity. The International Monetary Fund (IMF) is predicting global economic growth to go from 6.0% in 2021 to 3.2% in 2022 and 2.7% in 2023. Meanwhile, the World Trade Organisation recently revised its growth forecast for global trade in 2023 to just 1.0%, down from an earlier estimate of 3.4%. This loss in momentum in many markets will significantly impact freight forwarders’ customer base. Meanwhile, Maersk’s latest market update expects global container demand to fall by 2% to 4% this year. It says freight rates are coming down faster than expected and the global container market will be “broadly flat to negative” in 2023.

More and more countries are implementing, or considering implementing, protectionist strategies to stem exports and protect domestic needs. As a result of the Ukraine-Russia crisis alone, the International Food Policy Research Institute’s food trade policy tracker showed 29 countries put export bans for food in place, equivalent to over 18% of the world’s total calories. The Chartered Institute of Procurement and Supply (CIPS) says the trend is one of global concern. It has identified food and oil as common targets for protectionist schemes, but that the range of product categories affected is expanding. These schemes are intended to offer protection during a crisis, but the continuing rise in their adoption can have a huge impact on the freight forwarding industry. It reinforces the need for freight forwarders to futureproof their supply chains, ensuring they are dynamic, agile, and flexible so they are ready for any supply chain disruption and equipped to respond effectively and quickly.

The global freight forwarding business is highly fragmented. Transport Intelligence (Ti) notes that mergers and acquisitions have been increasingly active in the past two years because of uncertain and turbulent conditions. With the economic situation deteriorating, it is likely that 2023 will bring further consolidation in freight forwarding, as companies seek to increase their capabilities and geographical reach.