Supply Chain Trends for Carriers to Watch in Q2 and Beyond
For the past two years, most freight and logistics industry trends have centered around supply chain disruptions like congested ports, materials shortages, labor shortages, post-Brexit challenges, and general economic instability. 2022 began with the hope of slow and steady improvement.
There were a handful of reasons for this cautious optimism: trucking employment was finally back at pre-pandemic levels, officials had implemented measures designed to ease port congestion, and capacity was expected to increase.
However, the state of the world has changed significantly since the start of the year, and experts are now predicting a much rockier road to recovery. So what can carriers expect for the remainder of 2022? Let’s dig into some potential supply chain trends and how to plan for them.
Same stressors, different year
While some experts believe that supply chain struggles could ease in Q3 of this year, many supply chain trends of 2021 will hold steady at least through Q2.
Congested ports – Container shortages and drayage backlogs will continue to strain supply chains as ships wait to unload. The west coast of the United States has seen some improvement; however, changes in capacity mean that east coast ports won’t be quite so fortunate.
Labor shortages – Throughout the industry, a shortage of truck drivers, warehouse workers, and dock workers was a key challenge last year. While truck driving employment seems to have bounced back somewhat in certain regions, it’s still a problem in others. Labor shortages will continue to cause bottlenecks.
Inflation – In the United States, the consumer price index for February rose 7.9% year over year, the steepest spike in over 40 years. Price hikes across the board will continue to impact consumer spending.
High demand for warehouse space – To plan for future supply chain shocks, many companies are looking to expand their warehousing capacity. In an already competitive commercial real estate market, this growing demand for warehouse space is driving prices up even higher.
Decentralized warehousing – More retailers are offering one- and two-day shipping to meet consumer expectations set by Amazon and big-box retailers. This often requires smaller, more dispersed warehouses (rather than just a few larger ones near major ports). As this decentralized warehousing strategy becomes more popular, carriers who cover multiple regions may benefit from more contract opportunities.
Impacts of the Russia-Ukraine conflict
The war in Ukraine is perhaps the most obvious source of supply chain disruption in 2022. Here are a few of the consequences carriers will need to contend with for the foreseeable future:
Changes in consumer spending habits – Along with gas prices, the war in Ukraine is also impacting grain prices. Higher costs for food and fuel will leave consumers with less disposable income, impacting forecasted freight volumes.
Further disruption to semiconductor supply chains – Russia and Ukraine are key exporters of vital manufacturing parts, such as wire harnesses and semiconductors. Due to logistics issues, many European car manufacturers have already had to shut down assembly lines and plants. This exacerbates the existing truck and trailer parts shortage, impacting overall commercial auto and truck production.
Rerouting freight transport – Due to restricted airspace over Russia and Ukraine, carriers will have to divert flights south, increasing the time it takes to deliver cargo and contributing to high fuel costs.
How can carriers stay agile?
As manufacturers, distributors, and retailers are trying to prepare for current and future trends in the supply chain, carriers can better serve their clients by digitizing for maximum supply chain visibility and prioritizing customer support.
Navigating such an unstable global market can be challenging, and waiting for data delays vital decision-making. For many carriers, digitization is the key to unlocking that data sooner. For example, enterprise solutions connecting carriers and drivers via mobile apps enable leadership to get near real-time data visibility and make informed decisions about load planning, dock operations, route optimization, and more.
In times of economic instability and supply chain disruptions, retaining existing clients is particularly important, so now is not the time to neglect customer support operations. Proactive communication and empathetic support can go a long way toward calming anxiety and nurturing relationships. Carriers should offer omnichannel, 24/7 support in multiple languages and up-to-date tracking information for all shipments to provide the best possible service.
2022 has already presented new challenges, even as we’re still working through the disruptions from the previous years. For carriers, staying agile in the face of instability will be key in the months to come. By making some careful adjustments to your business strategy — like prioritizing digitization and customer support — you can set yourself up for business continuity and survive what the rest of the year has in store.