According to the “State of Logistics” report by the Council of Supply Chain Management Professionals (CSCMP), U.S. logistics costs dropped 11% in 2023 to $2.4 trillion. Despite the reduction, U.S. business spending on logistics is still high, following a 22.4% increase in 2021 and a nearly 20% rise in 2022.

Many logistics companies recognize supply chain volatility will continue. However, investment in technology and infrastructure to handle disruptions remains low. The CSCMP report pointed out that buyers of freight services currently have an advantage, but it would change as shipping capacity tightens. Air and ocean freight volumes have surged as importers have pulled forward orders to avoid space shortages.

The rerouting of ships around the Cape of Good Hope has strained carrier networks and available equipment, resulting in vessel bunching and port congestion in Asia and some European hubs. Container rates have skyrocketed, with Trans-Pacific and Asia-Northern Europe rates 50% higher than in April, nearly three times higher than last year, and 3.5 times higher than in 2019.

The CSCMP report also highlighted that freight demand was weak in 2023, except for a fourth-quarter boost to air and ocean volumes from e-commerce. Capacity is expected to tighten later this year, adding pressure for higher rates. Trucking struggled with overcapacity, leading to low rates, though prices might recover by late 2024 or early 2025. Rail traffic grew slightly, but revenues fell by -2%, with intermodal volumes down -6%. However, the outlook for intermodal volumes is positive as more manufacturing shifts to Mexico.

Source: American Shipper