2023 is officially in full swing. As we continue into the new year, we enter the stagnant part of the freight calendar. Q1 always proves to be a difficult time for freight companies due to a combination of factors. Retailers all around the world clear unwanted stock from the holidays and construction begins to slow down as weather conditions continue to worsen.
Although these difficulties are still present, the freight market seems to be returning to normalcy at a faster rate. Looking back on last year, the Omicron outbreak created a shortage in staffing for drivers, warehouses, and cross dock employees. This reduced truck capacity and affected pricing like never before. With the spread of COVID-19 decreasing in 2023, companies have been able to restaff and gain a positive look on the new year.
Although the return to normalcy from COVID-19 is near complete, the concern for freight companies shifts to the economy. It is expected that high inflation and interest rates may start slowing consumer spending causing some prolonged inventory issues. The Bloomberg consensus is expecting industrial production to hit a dip at -1.7% causing some slowing in freight from the industrial sector.
Brandon Porch, Axle Logistics General Manager, shares his thoughts about the market.
Historically, lower volume following the holidays is not uncommon aside from the disruption caused by Covid-19. As the weather begins to improve and commodities that move in full truckload begin to be needed again, such as building materials, the market begins to improve.
The economic outlook is something to monitor closely. There are some projections showing as many as 700,000 people losing their job over the next quarter which will dramatically affect both consumer spend, and in turn cause shippers to closely monitor and control inventory levels.
Lower volume nationwide will cause markets to shift dramatically as carriers will flee stale regions and rush to get their trucks to the regions with more opportunity and higher pay. Produce markets especially will need to be monitored closely as season approaches.
Despite the weak start due to the economy, carriers look forward to Q2. During the spring, growth is expected once inflation eases and consumer spending returns.
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