Out of all of our annual surveys and features that we do in Logistics Management (LM), by far my favorite continues to be our Annual Rate Outlook cover story that we then bring to life in a live webcast (Jan. 25)—something that I refer to as the best “one-two punch” available in the market for shippers looking to gain clarity on where logistics costs are headed.
In fact, the Rate Outlook was the very first web event that we spun off of one of our annual print features, and 2024 marks the 19th year since we launched this successful platform. And over all those years, our analytics always show that this delivery approach for the Rate Outlook data continues to yield our most-read magazine feature and our best-attended webcast year, after year, after year.
As long-standing LM readers are aware: We lead off with the Rate Outlook feature that offers a snapshot of the state of the economy and then examines how those realities will affect freight rates and capacity levels. We then gather those sources on to our Rate Outlook webcast panel discussion where shippers can submit questions directly to some of the top analysts in the market—unique access that one doesn’t gain every day.
In what’s becoming tradition, Brooks Bentz, long-time supply chain consultant, carrier executive, and LM contributor and columnist, rounded up this year’s panel for a second year. He spent the last two months speaking with top minds in the industry, and the fruits of that labor unfold on page 16.
Which leads us to: Where does our 2024 panel see rates heading? “The French novelist Jean-Baptiste Alphonse once wrote: ‘The more things change, the more they stay the same,’” says Bentz. “To put this into context, it means the cycle of rate and capacity fluctuations will continue their age-old volatility, just in a more muted fashion. I wish I had better news, but it’s going to be more of the same—at least for the first half of the year.”
Where does this leave us? First, it created a difficult task for our art team. How do you illustrate the concept of more of the same? “I think the image of a carousel nails it,” adds Bentz. “It summarizes the repetitive, cyclical nature of what the freight transportation market experiences…and it will continue to go round and round.”
And, if we were to name a horse on this carousel, it would be “Uncertainty”—now the common denominator across all logistics budgets. As Jason Kuehn, partner at Oliver Wyman and long-time LM source, explained to Bentz: “With uncertainty comes rather lethargic rates. Even though inflation has moderated, it’s still above Fed target levels. This suggests that the Fed may take a wait-and-see approach, but is not likely to lower rates. This will still constrain economic growth.”
As Bentz reiterates, we are seeing some signs of light, as the economy seems to be chugging along fairly well. “Unemployment remains at historic lows and off-shored manufacturing seems to be gradually returning, either to North America or Mexico, as the labor arbitrage advantage of Asian sourcing is diminishing,” he says. “This will create shorter, more dependable freight transportation lanes, but that’s not enough to make a significant shift.”
How do we jump off the carousel and find new ways to control costs? “Think of it this way,” says Bentz. “We had the big shift from steam to diesel power, and we had the birth of containerization, which was followed by the development of the mega-ships. And we’ve seen highway trailers morph from 35 feet to 53 feet. However, most of these significant shifts have now reached their practical upper limits.”
According to Bentz, the next big transformation is in front of us and quickly evolving. “AI-enabled technologies will be creating the next great leap forward in operational productivity improvement and cost reduction,” he adds.