As we do every year at this time, we look forward to the year ahead and share with clients and readers what they might be able to expect based on what we see within the transportation and logistics industry. The LTL and Truckload outlook for 2023 looks more promising than the start of 2022, but will still face challenges and uncertainty in the new year.
2022 in Review
Last year, we predicted tight capacity, elevated rates with LTL and FTL, and a potential rate drop later in the year. Our outlook was reasonably accurate but couldn’t account for the war in Ukraine’s trickle-down effect on fuel and rising inflation, which lightened demand in the year’s second half. Here are the high points to note from 2022.
- Container movement was stagnant from ports, and truckload contract rates were up 122% at the beginning of 2022. They have since fallen nearly 60%
- As predicted, LTL/FTL capacity was tight due to labor shortages and a lack of equipment and truck parts
- Semiconductor chip demand caused delays in the equipment manufacturing sector
- Many LTL carriers had multiple rate increases due to higher operating costs associated with labor, equipment, and fuel
- LTL carriers began enforcing accessorial costs to offset inefficiencies caused by shippers
- Early demand saw higher truckload rates, but because of inflation, demand waned in the second half of the year
- The beginning of the year saw record diesel price increases, but gradually dropped towards the second half
What’s Ahead This Year?
Because of rising inflation, the threat of a looming U.S. (and global) recession, and the constant fluctuation of fuel prices, the LTL/FTL outlook for 2023 is uncertain.
We’re anticipating new rate hikes in LTL. However, because inflation is curbing spending and larger retailers are still moving stockpiled goods, we’re not expecting the capacity crunch caused by our record-high growth in 2022, especially in the full truckload space. LTL spot rates may decline, but shippers should be wary of potentially volatile service.
LTL and truckload carriers’ operating costs (fuel, parts, labor costs, etc.) remain high. Carrier consolidation and expansive growth will likely slow this year because of rising interest rates and borrowing costs.
As mentioned above, full truckload rates declined at the end of 2022 due to a decrease in demand. While these low rates continue into the new year, there’s a possibility they may jump should carriers shut down. Carriers had to expand quickly over the last few years to meet unprecedented demand. Now that demand has decreased, some of these carriers are struggling to maintain their investments in equipment and drivers.
Diesel Prices are up 43% since November 2021 but tapered off slightly late in 2022. We anticipate fuel prices to drop slightly (around 14%) this year, but unknown factors like the continued fighting in Ukraine could potentially impact fuel prices throughout the year.
Managing LTL/Truckload in 2023
Supply chain and transportation logistics managers will face many challenges this year, but the capacity crunch seen over the last three years doesn’t appear to be one of them.
Bloated inventories should be less expensive to move in the first part of the year with softened freight rates, but fuel costs will remain high.
Partnering with a 3PL like Amware will offer freight managers the best rates from multiple carriers for LTL and full truckload freight through our cloud (or premise-based) TMS, Amrate.
Contact us today and discover how we’re helping LTL and FTL clients navigate these unpredictable times while continuing to save them money. Click below to request a free trial of Amrate and compare rates today. Or upload your rates and compare them to other carrier rates. The Amrate platform offers the best of both worlds.