DHL Supply Chain – Q1 2023 Transportation Quarterly Trends

Top Three Trends Worth Noting for Q1 2023

1. Spot Market Rates

While we did see spot market rates increase slightly over the holiday season, we are now seeing normalization in Q1 against the high rates of last year, with spot rates continuing to decrease, and riding under contract rates.

Tender rejections remain historically low, which means capacities are loosening up. This is a good sign as it shows there is plenty of economic activity occurring. Analysts predict we will reach the market floor with spot rates sometime by the first half of 2023.

2. Port Congestion

While port congestion is down significantly compared to COVID-19 levels, congestion and service disruptions for the Northeast and Gulf ports continue to challenge the market. Container dwell time at ports in Southern California has continued to normalize over the last 45 days. We see two primary reasons for the significant reduction in port congestion.

First, businesses based in the U.S. are taking action to draw down inventory, which is reducing the amount of import activity and lightening congestion. Second, the point of entry into North America is becoming diverse, with more activity shifting to Gulf and East Coast ports. We are seeing choppy import booking through customs, which is a good indicator that congestion will continue to remain low.

3. Freight Volume

Freight volume continued to decline in Q1. While the industry typically sees an increase in truckload demand in January and February of each year, this year’s uptick during these two months was at the slowest pace in the past five years. This implies that seasonal demand for this time of year might be lower than what has typically been seen in previous years. One reason for this is that decreasing manufacturing output continues to lag behind recent historic output, which is an indicator that inventory is being drawn down.

Given the decrease in volume, we have surprisingly not seen a high number of bankruptcies with trucking owner/operators. This is probably because many of them locked in at the low interest rates. If interest rates continue to increase, further impacting big purchases, freight volumes will remain low and may begin to cause an eventual rise in bankruptcies. If this occurs, it will recalibrate the demand ratio.

For more information on how DHL Supply Chain can help you overcome your transport challenges, while maintaining high levels of service, reliability and supply chain visibility, visit our transportation solutions content hub.

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