Air cargo volumes are decreasing and shipping prices are increasing. The demand for freight shipping and truckers is surprisingly dwindling before Christmas. Retailers are trying to reduce high fulfilment costs and increase profits. Maersk makes a shift in business towards logistics, while clogged depots could cause significant problems in 2023.
Air Cargo Volumes Plummet – What Will It Cost You?
A report last week from Clive Data Services indicates that air freight demand has fallen. This is the eighth consecutive month of decline in freight demand. Volumes declined 8% YoY in October. DHL has responded by raising their shipping express rates. The average 7.9% increase comes after their Express’ Time Definite International volume fell 6% YoY in the first half of 2022.
Freight Demand Drops Before Christmas
For freight operators, this is usually the busiest time of year. But with the current state of the market shipping demands are dwindling more and more each day. Most end-of-year projections are now looking to be much lower than previously reported for several companies, including Amazon.
How To Combat High Fulfillment Costs
With shipping prices rising, retailers are noticing a loss in profit. Many retailers are strategically shifting to offering delivery on specific dates instead of as soon as possible. With consumers buying less, retailers are focusing on restraining high costs. This includes fulfillment and last-mile delivery.
Can Logistics Revenue Surpass Shipping?
If this week’s roundup is any sign, then it’s no secret that shipping demands are in trouble. A.P. Moller-Maersk A/S thinks it’s only going to get worse. With consumers pulling back on spending, the shipping container giant believes that revenue from logistics has the potential to surpass shipping. After an earnings call last week, it looks like the company is getting ready to shift its focus away from the ocean market. Maersk plans to focus more on logistics as a whole in the coming years.
2023 Container Market Shakeup
The shipping demand decline could also prove troublesome for the container market. Insufficient depot space is a highlighted concern for 2023. A ripple effect in container logistics is expected to be felt in the coming months. The main cause is products coming in from overseas but not moving to retailers. Caused by consumers pulling back on spending amidst inflation. Container owners should expect a possible rise in fees and repositioning containers to Asia.
The logistics market is rapidly changing, and it’s essential to stay ahead of the curve. Are you concerned about how these changes will affect your business? Are you free for a quick call to chat about your eCommerce fulfillment plans for 2023? My team of logistics experts is ready to assess your needs and develop a tailored plan that keeps your business moving forward.
