Looking at the same data over the past year the IOTI is up 26% and the OTVI is up 9.4% year over year, somewhat validating the GDP figure. So why are so many companies still struggling?

For transportation the answer is simple — oversupply. Not just standard oversupply, but capacity growth in nearly direct proportion to the demand growth in 2020-21.

Trucking operating authorities grew about 33% from January 2015 to January 2020. From June 2020 to June 2022, authorities grew 50%, nearly quintupling the previous five-year annual growth rate. Demand is down about 30% from 2021 highs. 

This is analogous with many other industries that overbuilt or overadjusted their infrastructure to pandemic conditions. Solutions were created for temporary problems that no longer needed the same level of attention. Demand forecasts in many cases remain broken due to the noise created by one of the biggest black swan events in modern times.

In short, infrastructure — which in this case includes jobs and processes — changes much slower than demand, which has become less understood.

Yin and yang 

The uneven distribution of positive and negative experiences has also helped make this economic environment so confusing. The services sector, which typically represents the majority of the GDP figure, had a booming 2022 as “revenge travel” hit. Subsequently, spending on goods waned.

The automotive and energy sectors also felt a lagging response as their demand waned in 2020-21 but returned in force once people were set free. Recall the futures price for barrels of crude went negative in April 2020. The West Texas Intermediate crude spot price averaged just under $40 in 2020. It has averaged above $90 since 2022. 

Before the pandemic, many of these sectors had well-defined relationships, which for the moment have been broken.

The positive takeaway is that the economy does appear to be stabilizing, though many sectors are still in distress. The steady demand growth over the past year in imports and truckload volumes bodes well for most sectors in 2024. The U.S. economy is driven by a healthy consumer.

Import bookings are a strong leading indicator as orders are placed weeks in front of expected fulfillment. Their weakness is in how long the goods stay in warehouses, but combined with tender volumes, that answer can be derived from how effectively that demand has been anticipated.  

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Logistics and Supply Chain Trends to Expect in 2024

These are just some of the trends that are expected to shape the global logistics and supply chain industry in 2024. Companies that can adapt to these changes and leverage new technologies will be well-positioned to succeed in 2024 and beyond.

1. Increased focus on visibility

·    Businesses are increasingly demanding real-time data and insights into their supply chains. This is leading to the adoption of technologies such as blockchain, artificial intelligence (AI), and the Internet of Things (IoT) to track goods and materials throughout the supply chain.

2. Sustainability becoming a top priority

·    Consumers and businesses are becoming more aware of the environmental impact of the supply chain. This leads to a focus on reducing emissions, waste, and resource consumption. Companies are looking for ways to optimize their packaging, transportation routes, and logistics operations to be more sustainable.

3. Automation and robotics on the rise

·    Automation and robotics improve efficiency and accuracy in warehouses and distribution centers. This is helping to reduce labor costs and improve throughput.

4. Continued growth of e-commerce

·    The e-commerce market is expected to grow in 2024, which will pressure logistics and supply chain operators to meet the demand for fast and efficient delivery. This is leading to the development of new delivery models and enhancements to fulfillment centers.

5. Talent shortage remains a challenge

·    The logistics and supply chain industry is facing a talent shortage, as there is a high demand for skilled workers. This makes it difficult for companies to find the people they need to operate their supply chains effectively.

6. Geopolitical factors continue to disrupt supply chains

·    Wars in Ukraine and Israel, rising trade tensions, and other geopolitical factors continue to disrupt supply chains. This makes it more difficult for companies to source materials and goods, leading to higher consumer prices.