As we head into 2024, three key issues will remain prominent for both carriers and shippers. The biggest question for all is: “When will we come out of the freight recession?”
Carriers, shippers and financial analysts have stopped making bold proclamations as to when the market will hit bottom, since every prediction throughout this year has been wrong.
The current consensus is that shippers and carriers will be dealing with weak freight markets for at least the first two quarters of 2024 — and possibly on into the third quarter.
If so, capacity could once again be tight as the weak economy causes more carriers — especially truckload carriers — to shut down and leave the market.
Second, we will be watching how the fallout from the teamsters’ contract with UPS, the contract at the West Coast ports and other changes to labor agreements will affect freight costs. Faced with higher labor costs, you can expect more carriers to rely on Activity Based Costing (ABC) models to determine their rate structures with customers. Consequently, more carriers and shippers will be focused on how the carriers’ assets are being utilized.
Third, as carriers recalibrate their networks to achieve more balanced freight flows, more shippers will be relying on technology that gives them visibility into the movement of their freight.
Fourth and finally, look for more carriers and shippers to be having discussions about payment terms. Shippers will be looking for extended payment terms; carriers will be looking for shorter payment terms.
With interest rates continuing to rise, this will be a very important point in the negotiations between carriers and their customers.