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Are ocean freight services going back to pre-pandemic levels? Are Industries going to recover and move on? How shall global markets behave? Will logistics be an engine for growth or a handbrake? read some analyses and forecasts from our experts.

At the beginning of 2Q2022, The Logistics World, organizers of one of the most important logistics events worldwide, listed four current challenges of the manufacturing industry:

+ Rising costs
+ Supply chain disruptions
+ Labor shortage
+ High level of competition

To talk about what we can expect for 2023 and the logistics trends in these scenarios, we can follow the same points.

+ Rising costs

According to the International Monetary Fund (IMF), inflation will keep rising around the world. The forecast is that it will increase from 4.7% globally in 2021 to 8.8% in 2022. Calculations published in October 2022 forecast a year-on-year drop to 6.5% in 2023, and to 4.1% in 2024.

The result may be a major global recession.

In October, Bloomberg published a survey with 40 economists; 75 percent of them said they see the likelihood of recession in the next two years.

The forecast is shared by World Bank and IMF leaders, too. The latter estimate that around 1/3 of the world economy will have at least two consecutive quarters of contraction in 2022 and 2023 – that’s recession, they say. The lost production until 2026 will be equivalent to 1 trillion dollars.

World Bank’s President, David Malpass, spoke of the real danger of a global contraction in 2023 because the strong U.S. dollar is weakening developing countries’ currencies. With that, their external debts will reach quite worrying levels.

The World Trade Organization (WTO) is also pessimistic. October’s projections marked a big slowdown from the 9.7% growth in global trade in 2021. The main impact factors identified by the WTO are:

> Russia’s war in Ukraine

> High energy costs in Europe

> America’s tough monetary policies, which increase household and manufacturing costs.

And speaking of industries in general,

+ it is the global supply chain that can keep the planet’s economy heading for growth.

 T21 reports a finding from an IBM study involving 1,500 Supply Chain Directors (CSCO), “Own Your Own Transformation”: 61% of logistics leaders in Mexico see supply chain disruption as the biggest challenge for their organizations in the next two to three years.

World Trade Organization (WTO) Director-General, Ngozi Okonjo-Iweala, has also warned of the dangers of shrinking global supply chains.

For Okonjo-Iweala, measures like this would only lead to more inflationary pressure and a slowdown in economic growth. “We need a deeper, more diversified and less concentrated base for the production of goods and services,” he said.

The big optimistic view comes from DHL, in its Trade Growth Atlas 2022. Organized from a study by researchers at New York University’s Stern School of Business, it presents ten major findings and forecasts, including:

#2. Trade is still expected to grow slightly faster in 2022 and 2023 than it did over the previous decade, despite forecast downgrades due to the war in Ukraine and slowing global economic growth.

#4. Trade growth is especially important in the present environment because of the power of trade to accelerate economic growth, reduce inflation, and enable countries to access multiple sources of key inputs.

#8. While trade is growing faster in emerging economies, advanced economies continue to generate the largest amount of trade growth. Looking forward, IMF forecasts imply that 55% of trade growth through 2026 will be in advanced economies, while 45% will take place in emerging economies.

This balance between economies and supply chains offers excellent opportunities for companies navigating through the risks of a potential recession…

…if they also manage to balance their number in the face of another shocking reality in specialized supply chains and international transport companies:

+ Labor shortages

In 2022, we had to find alternatives to move cargo through routes that were not being affected by airline workers’ strikes – such as Lufthansa pilots’, in September.

With critical cargo teams acting fast, the crisis lasted only a few days. Nevertheless, new strikes are still a threat, catalyzed by inflation (and its impact on the workers’ cost of living).

One example was Heathrow shippers (IATA: LHR) menacing to stop just before the World Cup in Qatar, organized by the same union that leads the strikes in the ports of Liverpool and Felixtowe.

Speaking of ocean freight services, apart from strikes, the shortage of personnel is now responsible for more than 50% of the daily operating costs of ships, reports Mundo Marítimo.

Demand for seafarers continues to increase, while supply growth is expected to be weaker in the future. The deficit of ship officers could reach a record by 2027, with a gap of 55,000 positions.

But this is not the only challenge for airlines and shipping companies in 2023:

+ High level of competition

We can also divide this section, commenting separately on the two main international transport modes:

1. Ocean freight services

2. Air freight services

Below, we’ll will discuss each one and the logistics trends for 2023:

1. High level of competition: Ocean freight services

For ocean freight service consumers, the outlook for 2023 looks quite positive, with freight rates falling and capacity rising.

Good news:

1. Falling freight price

2. Capacity increase

As some agents observe, the demand for consumer products has been decreasing in recent months, and that can lead to a fall in prices.

The fall in prices has been slow and shipping companies have already begun to react with blank sailings and other strategies to stop rates from falling even more.

But Freight Waves comments on a rather interesting tradition of the shipping industry: “When the profits of shipping companies are exceptionally high, they order many new ships,” they comment.

The tradition is alive. Just over a year ago, in August 2021, Bimco reported that there were 619 orders for new container ships. Those with a capacity of 16,000 TEUS were the most popular.

Returning to the tradition reported by Freight Waves, it says that when shipyards deliver new vessels, shipping companies’ profits fall to the ground. “This boom-and-bust behavior has been a reality for more than a century.”

“Most of the tonnage ordered will be delivered in the next two years: 2.34 million TEUs in 2023 and 2.83 million TEUs in 2024, compared to about 1.1 million TEUs in both 2021 and 2022,” they report.

“One way to compensate this is for transporters to scrap older vessels,” Freight Waves explains. “Virtually no container ships were scrapped in 2021-22, because freight rates were so high. Carriers ‘will try to take as many older, polluting ships from the market as quickly as they can,’ Drewry predicted. ‘Our baseline forecast includes provision for a near-record level of demolitions in 2023.’”

The elimination of long-standing container ships from the seas will also help shipping companies comply with the new rules of the International Maritime Organization (IMO).

From 1 January 2023, it will be mandatory for all ships to calculate their achieved energy efficiency index (EEXI) and initiate data collection for the reporting of their annual operational carbon intensity indicator (IIC) and IIC rating.

Greg Miller, a shipping expert at American Shipper, points out some strategies for shipping companies to escape tradition and avoid collapse.

Dilly-dallying is not one of them. In his analysis, Miller quotes Simon Heaney, senior container research manager at Drewry: “Doing nothing is not an option. Shipping companies cannot exert any influence on demand. They have no choice but to focus on the only thing they can control: supply. And after the consolidation and restructuring of alliances, they are now in a much better position to cope with the so-called ‘danger years’ and get the right capacity to ensure a peaceful future.”

Market dynamics in January and February – once the 2023 Chinese New Year celebrations run from January 22 to February 9 – will be decisive in knowing how rates will move from the end of the first quarter onwards.

2. High level of competition: air freight services

At the Powermeeting event, organized by Todo Logística y Comércio Exterior, Jorge Monzón, air import sourcing manager at Europartners Group, presented his perspectives on the air cargo transport market at the end of 2022, and his forecasts for logistics trends in 2023.

“Air imports to Mexico experienced a strong year-on-year growth of 8% between 2021 and 2022,” Jorge reveals.

In 2023, the focus is recovering from the losses left by 2020 and 2021. “In 2023, the air freight market promises to return to normal according to information from IATA,” predicts the specialist.

Commercial air traffic has experienced a slow recovery:

> Flights remain more than 60% below pre-crisis levels globally.

> More and more airlines are normalizing their operations in those destinations that had suspended services.

To return to normality, Monzón lists some good practices:

• Diversifying the transport modes in international plans to maintain efficiency in the logistics chain.
• Focusing on services that offer more space availability, reduce bottlenecks and avoid delivery delays.
• Digitalization will be a key factor in reducing costs and transit times for companies.
• Anticipating the peak season:

. Preparing a forecast

. Making agreements with airlines (preferred carriers)

. Contracting consolidations and/or allotments to ensure space

How to prepare for 2023’s logistics trends hand in hand with Europartners Group?

For Jyothi Shankaran of Stat Trade Times, freight forwarders can continue to grow if they are able to bring value and innovation to a world of such complex logistics challenges.

As your strategic partner in logistics, we are increasingly concentrating our efforts in designing time-sensitive solutions, plans that involve a combination of transport modes – mainly but not exclusively air freight services – tailored to your needs, your time, your supply chain.

Whether for programmed cargo or servicing you on an urgent shipment with premium critical cargo services, we are at your side, with experienced professionals in the main specialized and manufacturing industries.

We also continue with our global expansion plan, to give you world-class local attention and an excellent consumer experience.

The DHL Atlas has as one of its main findings that “new poles of foreign trade growth are emerging  in South-East and South Asia, and international trade growth is expected to  accelerate dramatically in Sub-Saharan Africa. After decades of eastward shifts, the center of gravity of world trade is poised for a southward turn.”

With our own offices in more than 20 countries and a large network of world-class partner agents around the world, we have the capacity and expertise to act in any site with a great potential for growth.

At Europartners Group, we work to be the best strategic partner in logistics for specialized industries and manufacturing. Connect with us. We connect minds to move the world!

With the inflation surging, every penny counts. On the other hand, having a strategic partner in logistics by your side can avoid the costly risk of a line stoppage. How to decide what is best for your company?

When the new lifestyle triggered by the Covid-19 lockdown restrictions boosted the demand for consumer goods, it burst a crisis for microchips and other semiconductors, that now requires seamless logistics plans to keep factories working – and products available in many industries.