5 Supply Chain Trends to Watch in 2023
The last two years have been busy and at times difficult for many in the logistics industry. At the same time, advances in technology have presented several new advantages for supply chains all over the world. One such advancement is the large shift in the shopping patterns of consumers who have opted for more online shopping over traditional retail. This in of itself has lead to massive changes in the way supply chains handle everything from order fulfillment to capacity issues.
During that time, we also watched the supply chain industry be put through the paces, facing disruption after disruption. Backlogs, bottlenecks and labor shortages were more than commonplace in the last couple of years. Mix that with all of those tech advancements and shifting consumer shopping preferences and you have the perfect storm.
Fast forward to today and some of these issues are now clearing up in some regards. We are not completely out of the storm, but it is beginning to look like sunnier days are ahead for the supply chain and logistics industry.
To better prepare for whatever 2023 may bring along with it, we have put together a list of the 10 supply chain trends for 2023 — 5 in this post and another 5 coming later in the month.
1. A move toward growth
The pandemic period of the last 2-3 years created near-constant disruptions and crises for the logistics industry. Logistics companies had to react quickly and fight for their survival in the face of slowing sales, partners who had to shutter their business for a period of time, and shortages of all kinds.
Some of those business that closed their doors are now either fully or partially back in operation. Not all were as lucky, however. Many never recovered from this and it continues to affect the supply chain and logistics landscape still today in a variety of ways.
Throughout 2023 the industry will become more stabilized and allow for strategies to shift. There will be a big push toward resilience and agility with a focus on avoiding a domino effect reverberating through entire supply chains. Logistics professionals should look at their long-term growth and strengthen their sustainability strategies before the start of the new year if they haven’t already. The theme of supply chain trends for 2023 will largely be ‘sustainability’ and ‘capacity’.
Growth is very much a byproduct of not only strategic planning but also the ability to be flexible and sustain operations through otherwise large industry disruptions.
2. Lower carrier rates
Consumer preferences shifting to online retailers recently has meant surges of business for logistics providers. That is, if they have the capacity for ecommerce fulfillment, which many scrambled to find quickly in the past few years. Luckily, as bottlenecks at ports continue to clear up and companies are able to clean out their backlogs, capacity is becoming less of an issue.
With more and more companies seeing this is the case across the industry, competitive pricing comes along with it. In order to stand out amongst a crowd of supply chains with newly increasing capacity, these businesses will find themselves offering discounted rates in the form of things like lower carrier rates.
As the industry grows and changes to meet demand, expect competition for lower rates and higher quality service to be a strong logistics trend that will play out during 2023.
3. Zone skipping
Zone skipping is a freight consolidation technique that involves many small packages bundled together for longer routes. These are then split up into smaller shipments when they reach a hub that is nearer to the destination. This strategy has several benefits but the primary takeaway is that it allows shippers to potentially save money by skipping carrier zones that the shipper would otherwise be charged for.
As e-commerce continues to grow, zone skipping will likely be utilized more and more by the logistics industry to reduce shipping costs per package.
4. Labor shortage
Leading into 2023, there are still not enough truckers to meet present or future demand. And even though a rail strike appears to be avoided averted for now, quality of life issues remain an ongoing challenge for hiring rail workers.
Warehousing and other logistics sectors are also expected to have trouble supplying enough labor to meet demand. Where capacity has loosened up for some, there will still be a shortage of workers to manage the influx of goods to warehouses, a shortage of truckers (the U.S. was short 800k truck drivers in 2021 according to the ATA) to move said goods in a timely manner and many other positions in-between.
The logistics providers that rise above this problem will be those that offer competitive wages and benefits in order to attract and retain good staff, while intelligently using automation and outsourcing options to make up for shortages. With such competition for labor, expect supply chain careers to become more competitive and attractive.
5. Bottlenecks and backlogs
Despite the ongoing recovery, bottlenecks and backlogs will most likely continue to be an issue throughout the majority of 2023. Logistics professionals will need to be aware of and take into account a few key things:
- late deliveries from manufacturers
- congestion at the ports
- various delay hurdles
Harkening back to the issue of labor shortages, it is easy to see how a lack of suitable workforce can further exacerbate those bottleneck and backlog issues plaguing many supply chains throughout the year.
Supply chain stakeholders will need to apply the lessons learned from this past year to keep close tabs on the market conditions and visibility within their supply chains to best anticipate any bottlenecks before they happen, and pivot accordingly.
Supply chain trends for 2023 and beyond
Looking forward to 2023, we can see that some issues from 2022 will continue to trend for a while. At the same time, the measures instituted at the onset of the COVID pandemic will keep rolling back. As that happens, the industry will have the opportunity to move toward a focus on growth. Expect this normalization process to encourage competition and reduced pricing from shipping services.
Companies in the logistics and supply chain sectors that anticipate and take advantage of these supply chains trends in 2023 will be able to stand out, improve their service and grow next year and beyond.
Stay tuned later this month for the remaining 5 supply chain trends to watch for 2023.