Continued Uncertainty Expected in the Freight Market Throughout 2022
The volatility caused by the COVID-19 pandemic will likely continue well into 2022 – and beyond. Here’s how you can navigate the uncertainty.
2021 brought one of the most difficult, competitive transportation markets to date, spurred by the COVID-19 pandemic, supply chain issues, and a volatile economic atmosphere.
With continued uncertainty expected in Q4 of 2021 and well into the new year, companies will have to plan accordingly. Here is the current 2022 outlook, along with recommendations for mitigating the uncertainty in the freight market.
The 2022 Freight Outlook
While we would love to have a magical crystal ball, the simple truth is, no one knows what will transpire in 2022.
What we do know is that spot market prices have continued to increase throughout Q3 of 2021, bid cycles have decreased to 3-6 months with many CPGs no longer putting lanes out to bid for the whole year, and elevated rates are expected throughout 2022 and potentially into 2023.
Carrier consolidation is currently happening, indicating that prices will continue to rise. According to Deutsche Bank analyst Amit Mehrotra in a recent FreightWaves article, the increase in demand and pricing currently impacting transport modes will last through the rest of 2021, continue through all of 2022, and could extend well into 2023.
The days of big carriers adding tractors, trailers, and drivers to gain market share are on hold. Today, carriers are more focused on profitability than market share and new technology helps them gauge even the slightest market changes / imbalances. Mehrota believes that earnings will increase by 12% in 2022 over 2021 levels, up from the 10% gains previously projected. His investment bank forecasts that transportation companies will likely report 2021 earnings growth of 33%.
An Industry in Need of Stability
From clients to drivers, stability, predictability, and long-term planning are the goal – and path – to a successful supply chain. While we have a long way to go before reaching this place of stability, focusing on planning ahead can lead to confidence.
Often, the transportation market can lag with national instability but it can also be a precursor to economic growth. With the distribution of COVID-19 vaccines, many are hopeful in a resurgence in the US economy as quarantining and social distancing measures ease.
Mitigating Instability in the Transportation Market
Planning ahead is key to maintaining stability in the midst of uncertainty. The farther out you plan, the more confidence you can have in your supply chain – and the lower your transportation costs.
At LiVe Logistics, we work closely with clients to help them strategize throughout prosperity and pandemics, leveraging a network of skilled drivers and a diverse fleet of vehicles to help get your products where they need to go – in a timely and safe manner that lowers your freight total cost of ownership (TCO).
As the market outlook continues to unfold as we near 2022, our representatives will be in close communication with customers to provide inside industry data, best-of-breed technology, and decades of industry experience to help ensure that your loads are delivered successfully every time.