Freight demand is expected to remain strong despite decelerating growth from recent historic highs, according to economists and transportation industry leaders who gathered in San Diego this week for the SMC3 Connections conference. Nearly 500 people attended the event, which draws executives from across the less-than-truckload (LTL) industry, including shippers, carriers, third-party logistics services providers (3PLs), and technology companies.
Most drivers of freight demand remain strong, including construction activity, corporate investing, manufacturing, and consumer spending, according to economist Chris Kuehl, managing director of Armada Corporate Intelligence, who delivered a global economic update to attendees on Monday. But there are headwinds, including inflationary pressures that are beginning to affect consumer spending in some sectors and high fuel prices that show no signs of easing. Despite recent fears and headlines, an impending recession is unlikely, according to Kuehl and others, although the general consensus is that freight markets and the broader supply chain are likely to experience a deceleration from the record growth they’ve seen since mid- to late 2020. “The macroeconomic outlook is generally good, and [the probability] of a recession remains low for now,” Kuehl said during his presentation. A panel of LTL carriers agreed that there will be some cooling ahead across the industry, due largely to inflation, rising interest rates, and overall slower economic growth. But they said e-commerce demands will continue to fuel the need for smaller, faster-moving shipments. Those conditions will continue to drive up demand for labor across the LTL industry, which includes truck drivers but also cuts across the broader logistics workforce, they said. Industry estimates peg the nationwide truck driver shortage at 80,000, but executives in attendance at SMC3 said labor challenges exist in the warehouse, the back office, and corporate environments as well. As a result, more companies are investing in efforts to attract and keep good talent, according to panelist Rob Estes, president and CEO of LTL carrier Estes Express. “Having good people is critical,” Estes said, adding that rising demand for service throughout 2021 pushed many in the industry to play “catch up” with their labor investments, as well as in technology and other areas. Tech investments are focused on areas such as network efficiency, freight accuracy, and pricing, according to the panel.
Gartner, Inc.