ITS Logistics today released the Q4 ITS Logistics US Distribution + Fulfillment Index, Powered by Cresa. This quarter, the Index reveals that the economy is currently experiencing a “slowcession” as the freight industry pushes through what feels like a recession. In addition, wage rates and access to general warehouse labor continue to show an overall reduction, but the industry will still need to pay well above the average for good talent.
“Over the past few months, the supply chain industry has experienced an imbalance with supply and demand for the movement of freight, which has resulted in very challenging conditions,” said Ryan Martin, President of Assets for ITS Logistics. “Although true, GDP grew at an annual rate of 2.1% in the second quarter of 2023, and growth in the third quarter rounded out at a robust 4.9%. From this information alone, it shows that we are not in a recession, but instead experiencing a ‘slowcession.’ We are finding ourselves in a sluggish economy that doesn’t quite tip over into a full on recession.”
According to a recent CNBC Supply Chain Survey conducted in October for the state of the freight industry, it was noted that the challenging economic conditions would continue into 2024. Overall, it was cited that a pullback in consumer spending in conjunction with high inventories would be the reasons behind the continued disruption.
The Index confirmed that, for a lot of shippers in the market, spending is still there, but it’s being driven mostly by higher prices, not necessarily by more units moved. When considering space/vacancy, certain markets continue to drive significant activity, but most have started to cool down, and delivery of new buildings has either been pushed out or been placed on hold due to these current inventory levels.
“There is a domino effect when the supply chain experiences a disruption,” continued Martin. “One of the impacts that this current economy is having on supply chain companies is finding that they still need to pay well above the average for good talent. We estimate that most employers need to add $2 an hour to these figures if that employer is over 15 miles from a major population center. Remote work is also seeing the most activity with certain openings, garnering hundreds of applicants within days of posting.”
It was reported earlier this fall that 90% of companies planned to implement return-to-office policies by the end of 2024, according to a report from Resume Builder, which surveyed 1,000 company leaders. The Index further confirms the trend as one key callout is that more employers are pushing for either hybrid or on-site roles as the market continues to change. Employers feel this is best overall for the productivity of their organization.
ITS Logistics offers a full suite of network transportation solutions across North America and omnichannel distribution and fulfillment services to 95% of the U.S. population within two days. These services include drayage and intermodal in 22 coastal ports and 30 rail ramps, a full suite of asset and asset-lite transportation solutions, omnichannel distribution and fulfillment, and outbound small parcel.
The ITS Logistics US Distribution and Fulfillment Index tracks the Producer Price Index (PPI) for Warehousing and Storage and offers a regional markets overview to optimize warehousing and delivery costs. All major markets in the US are highlighted each quarter via the Index. Visit here for a full, comprehensive copy of the index with expected forecasts for the US distribution and fulfillment sector of the supply chain industry.
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