Analyst Insight: Fluctuating capacity, unpredictable transportation costs and high inventory levels continue to impact shippers of all sizes and freight types. As demand softens heading into 2023, shippers need robust transportation management solutions that provide greater visibility, access to capacity, and the ability to optimize mode and carrier selection in order to adapt to market changes and address both short-term and long-term needs. 

Since July 2020, approximately 195,000 new trucking companies have entered the market, according to FTR Transportation Intelligence, to address the high consumer demand for goods and to take advantage of strong spot rates. The market quickly absorbed this new capacity, but as shipping demand began to falter in 2022, spot rates fell and we will now see capacity rebalance in the months ahead. Both the truckload and less-than truckload markets softened in the second half of 2022.  

Heading into 2023, reduced demand due to the macroeconomic environment, combined with higher trucking operating costs (particularly fuel and higher wages), will likely cause even more capacity to leave the market. While this may balance demand and overall capacity, some volatility should still be expected. 

To position themselves for success, shippers need solutions that give them options to identify the right transportation mode, manage costs, remain assured of capacity availability, and gain visibility into needed shipment detail. An intelligent, multimodal transportation management system (TMS) lets shippers do just that, by automating their transportation operations and simplifying the way shippers source capacity and manage shipments.  

Shippers of all sizes and freight types can benefit from a robust TMS in several key areas:  

Capacity. A TMS can provide access to a larger, more diverse carrier network, and digital freight-matching capabilities can streamline the procurement process by allowing users to match loads quickly and efficiently with available capacity, while providing instant quoting and booking capabilities that make securing moves more efficient. 

Visibility. Shippers gain greater visibility into key aspects of their transportation operations, including shipment data and available capacity in specific markets and lanes. Access to better shipment and market data supports smarter, faster planning and execution.  

Optimization. Digital platforms enable shippers to better optimize their transportation operations, including optimal mode, route and carrier selection. They provide a controlled environment to ensure the low cost and high performing carriers are selected — whether using a bid board in the spot market or contract carrier selection.  

While a TMS can provide exceptional value, in today’s complex and volatile environment shippers need more than just technology that simply matches freight using algorithms. They need solutions that are backed by a team with market expertise and strong carrier relationships. Partnering with a logistics provider that combines intelligent digital solutions, a large carrier network and deep industry expertise will enable shippers to better optimize their logistics, and be able to scale and adapt when the market shifts or disruptions arise.  

Some organizations, especially within the SMB space, have tried bringing their transportation operations entirely in house when it’s not a core competency and have started to fall behind. But having the right partner helps shippers simplify and optimize their transportation management, and allows them to focus on business vs. supply chain market trends and disruptions. 

Outlook: More trucking capacity is expected to leave the market in 2023, which will allow capacity and demand to start balancing out.The truckload market will continue to be fragmented, so we should still expect some volatility in the near- and short-term. Inventories are also expected to remain elevated throughout the beginning of the year, which will contribute to tighter capacity in the market.