Six Supply Chain and Logistics Trends for 2023
The last few years have made a mockery of many pundit predictions as to geopolitical and economic trends. Black swan events like covid and Russia's subsequent invasion of Ukraine have resulted in unprecedented(in modern times at least) disruption and volatility. Those years have also caused significant disruption to supply chain and logistics strategies and services. These challenges and the learnings from them are setting shippers and logistics service providers (LSPs) down different paths in 2023 and beyond.
Looking at research and analysis combining economic, demographic, and industry insight, six significant trends have emerged for 2023.
1. Cost containment. High inflation and the Federal Reserve Bank’s efforts to get it under control shaped much of the C-suite’s thinking in 2022 and will continue to do so in 2023. For most companies, cost containment (as opposed to growth) will be the top priority in 2023, and the supply chain will be under intense scrutiny as everyone tries to get costs under control.
2. Global supply chain rebalancing. A number of factors, ranging from extended and disrupted supply chains to uncertainty driven by geopolitical tension and lingering impacts of the COVID-19 pandemic, are causing supply chain executives to rethink their sourcing strategies in 2023. Instead of cost-optimized supply strategies, there will be more focus on resilience and agility.
3. Home/last-mile delivery performance improvement. The pandemic brought a step-back in delivery performance in the B2C and B2B markets as a result of exceedingly high delivery volumes and driver shortages. This poor performance is evidenced in a home-delivery consumer sentiment study conducted by Descartes. Almost three-quarters of consumers, 73%, indicated that they experienced a delivery failure in the three-month period prior to the study.
4. Sustainable logistics. More consumers are making purchase choices based on brand and retailer sustainability efforts. In fact, 39% of respondents in Descartes’ survey on consumer sentiment around sustainable delivery said they “regularly” or “always” make purchasing decisions based on the company’s or product’s environmental impact.
4. To combat the labor shortage in 2023, shippers and logistics companies will focus on automation, especially soft automation. The goal will be to improve the productivity of the workers they do have and to minimize the number of workers they need in peak season.
6. Global logistics digitization. With softening shipping demand and excess logistics capacity, LSPs and carriers will be under pressure to find ways to be more competitive, keep costs down, and improve customer service. In 2023, digitization will be the most important strategy for LSPs and carriers to simultaneously address all of these factors.
Nucleus sees these trends as confirmation and vindication of our 4PL Supply Chain as a service business model and is excited for the challenge and opportunity that 2023 brings.