The global shipping industry has been mired in a freight recession this year and the challenging economic conditions will continue into 2024, according to a new CNBC Supply Chain Survey. High inventories and a pullback in consumer spending are reasons behind the bearish outlook.
The CNBC Supply Chain Survey was conducted Oct. 21-Oct. 31 among logistics executives who manage freight manufacturing orders and transportation, including those at C.H. Robinson, SEKO Logistics, DHL Global Forwarding Americas, Kuehne + Nagel, OL USA and ITS Logistics. These companies have insight into the orders shippers place into manufacturing companies around the world because they pick up the product from the ports as well as distribute products from warehouses to retailers.
This part of the trade pipe gives investors a three-to-four-month advance insight into retail consumer expectations based on the number of orders placed and the amount of product they have truckers move from the warehouses to the stores. It also provides a read on freight rates and what kind of freight volumes will be moved by truck and by rail — two key revenue drivers for companies in the shipping sector.
Alan Baer, CEO of OL USA, who participated in and reviewed the survey, tells CNBC the results indicate a freight market that will have little to no growth during the first half of 2024, which means stable to downward pricing, and hopes that during the second half of 2024 volume increases.
“Without more freight moving, 2024, and potentially 2025, will continue to see soft pricing as capacity outstrips demand,” he said.