6 Trends in Supply Chain and Logistics for 2023

Many macroeconomic and geopolitical challenges, as well as significant lessons about risk and disruption Supply Chain Brain combines research and analysis of economic, demographic and industry insights to present six major trends that will emerge in supply chain and logistics in 2023.

1. Cost Containment

High inflation and the Federal Reserve's efforts to respond to controlling inflation. For most companies, controlling costs (rather than growth) will be a top priority in 2023, and every link in the supply chain will come under scrutiny as everyone tries to control costs.

Given weakening demand across all transportation segments, shippers and logistics service providers (LSPs) will move to cheaper ways of working together without impacting performance. Shippers can employ a variety of strategies and tactics to reduce transportation costs or increase transportation-related revenue.

2. Global Supply Chain Rebalancing

From supply chain disruptions and delays, to uncertainty from geopolitical tensions, to the lingering effects of the epidemic, many factors are causing supply chain executives to reconsider their sourcing strategies in 2023.

Instead of cost-optimized supply strategies, there will be a greater focus on resilience and flexibility. Companies seek to respond more aggressively to changes in sourcing without losing opportunities or holding too much inventory. Initiatives by countries to secure the supply of critical materials and products will lead supply chain executives to adopt friend-shoring approaches and further diversify sourcing beyond specific countries and regions.

In many cases, these strategies will make supply chain management more complex, but better able to respond to ongoing market volatility. The extent of rebalancing will quickly identify new sourcing, manufacturing and logistics options will be critical, as alternative capacity will quickly be consumed or become expensive.

3. Last-mile Delivery Performance Improvements

This was demonstrated in a home delivery consumer sentiment study conducted by Descartes. Nearly 73% of consumers said they experienced a failed delivery experience.

As time goes on, customers become less forgiving. They will seek to provide a better customer experience by offering a wider range of delivery options and improving the accuracy of delivery services. To further enhance the customer experience, real-time shipment tracking and delivery information will be provided directly to customers.

4. Logistics Environmental Friendliness.

Increasingly, consumers are making purchase choices based on the environmental efforts of brands and retailers. In a Descartes survey on consumer perceptions of green delivery, 39% of respondents said they "often" or "always" make purchasing decisions based on the environmental friendliness of a company or product.

In a boatload of cases the focus is on the environmental friendliness of the product or packaging; however, consumers are now increasingly concerned about greener logistics options. In the same study by Descartes, half of the consumer respondents were "quite/very interested" in greener delivery methods.

5. Precarious Workers

Despite what appears to be a slowdown in consumer demand, there is still a shortage of warehouse workers and drivers. For shippers and LSPs, competition for workers is not just with their peers, but with every company in every industry. According to the U.S. Bureau of Labor Statistics, there are currently only 0.6 people available for each job.

Descartes' analysis explains that the labor shortage in the U.S. is actually structural, due to declining birth rates and a failed immigration strategy. Due to the labor demand/supply imbalance, hiring challenges will continue, especially during peak seasons.

6. Informatization of Global Logistics

With weak shipping demand and logistics overcapacity, lsps and carriers will be under tremendous pressure to find ways to be more competitive, reduce costs and improve customer service. In 2023, digitization will be the most important strategy for LSPs and carriers to address all of these factors simultaneously.

For shippers and LSPs, 2023 will be another year of "shifting". Cost and service will drive this agenda as business needs seem to fall short of growth priorities.

Many shippers have learned in the past few years that their supply chain and logistics strategies are no longer sound and must change. For LSPs, the shipping industry's "party" is over and in 2023, efforts will have to be redoubled to improve cost efficiency and service. All of these important trends will improve the performance and resilience of supply chain and logistics, and better align the industry with global macro trends, such as sustainability.

About Supply Chain Brain

Supply Chain Brain magazine is the world's most comprehensive supply chain management information resource based in the United States and is read by thousands of industry executives in a variety of ways throughout the year. In addition to publishing basic supply chain management guidelines and information, Supply Chain Brain magazine identifies the latest supply chain management trends, technologies and best practices, communicates forward-thinking ideas and advanced solutions, and writes and reports on them as they evolve and develop.