We continue our tradition of providing thoughts and prognoses for the upcoming year, 2024. If you missed our previous year’s prognosis, you can look at it here. The year ahead will bring challenges and opportunities, particularly with a potential mild shift towards a logistics service providers market in the year’s second half. Moreover, given recent bankruptcies in the freight market, companies selling equipment, and loss of customers, now is an opportune time to take the lead. Below, you’ll find our prognosis; please be understanding if predictions don’t pan out, as the situation evolves rapidly, making it challenging to be accurate all the time.
1st. We will not witness a fast recovery in 2024.
Despite widespread anticipation for a swift recovery, our perspective, along with that of many analysts, suggests otherwise. Most major economies are grappling with an inflated interest rate environment, leading to reduced consumption. Although the ECB and FED discussed lowering interest rates in 2024, this change has yet to materialize. Moreover, any rate adjustments are likely to occur gradually, limiting a sudden surge in spending. Another factor to consider is that consumers purchased substantial amounts of durable goods (such as building materials and tech) that heavily relied on logistics services during the pandemic. Consequently, these products are still in decline. Additionally, the challenge of elevated inventories remains unresolved. Therefore, we anticipate only modest improvement in the coming year and not earlier than the year’s second half.
2nd. Asset-based Trucking Companies and Logitech Companies Will Still Be in Danger
In 2022/2023, there were bankruptcies among asset-based transportation companies and digital freight brokers in Europe and the USA. An increasing number of companies sought opportunities to sell trucking units. We anticipate this trend to persist in the first half of 2024 in Europe. Trucking companies that were bullish on acquiring new equipment through credit, especially those operating in FTL general cargo business (because general cargoes transported by tilt trailers have decreased significantly and the largest economy in Europe is experiencing slow growth) will carry a higher risk. In the USA, the market is notably fragmented, with individual stories such as the booming Mexico trade, but overall growth will be too slow to benefit every market participant equally.
Regarding Logistics Technology Solutions, we maintain our belief that more companies will face bankruptcy or be acquired for nominal amounts. Digital freight brokers and visibility providers are expected to be the most affected. Acquiring new customers for such companies in 2024 will prove exceptionally challenging, considering the already difficult circumstances of the previous year. It’s important to understand that market participants actively seek real solutions with clear Return on Investment (ROI) and value propositions, prioritizing practical things over nice-to-have features.
3rd. About Freight Prices Generally
When considering freight prices, we anticipate a decline in the first two quarters for most modes and lanes, with exceptions for those affected by unforeseen events such as the Suez Canal blockage, war, or limited supply. Subsequently, we expect a gradual increase in the second quarter, though not a drastic one.
It’s crucial to bear in mind a few wild cards currently in play that could alter this prognosis. If the limitations in the Suez Canal persist throughout the year, it could lead to price increases not only for sea freight but also for air, road, and rail freight because this could lead to a heightened need for alternative modes of transportation to address imbalances in the supply chain.
Another factor to watch is the ongoing situation in Israel and the potential involvement of a broader range of countries. Additionally, there are potential risks of new hot spots emerging in Asia, which could further reshape supply chains and influence pricing dynamics.
Finally, the resolution of the war in Ukraine has the potential to boost demand for various materials, introducing another variable into the equation. Stay tuned for these developments, as any change in the geopolitical landscape can contribute to price fluctuations.
4th. The European Road Freight SPOT Market Outlook
Discussing the European SPOT market in the current year reveals a noteworthy shift as it dipped below the contract market – a trend unseen for many years. This development has left load boards notably sparse. Considering the economic factors discussed earlier, we anticipate that the SPOT market will face challenges most of the year. If conditions improve, recovery in the fourth quarter may be possible, leading to increased loads on load boards and potential price increases. However, we believe the contract market will still be higher all year. Any abnormalities, such as events impacting the Suez Canal or war zones, could introduce uncertainties and spur sudden, significant increases in demand, potentially hastening the recovery for specific lanes and modes.
5th. Positive Things for This Year
In every challenge, there lies an opportunity for others, and 2024 is poised to offer numerous chances for companies to thrive.
First and foremost, this year presents an excellent opportunity for newcomers to enter the freight or logistics market. Contrary to the belief that the best time to open a business is during a growth cycle, the reality is that many companies tend to stick with the status quo during such periods. In challenging times, however, startups can find employees more easily and catch customers from existing market players who have lost their grip and provided bad services. Another crucial aspect is that many logistics companies have sold their assets, and shippers have reduced their service providers’ count. Therefore, a gap will emerge as the recession period ends, providing newcomers opportunities. The same holds true for existing market participants who weather the recession.
Now is also an optimal time to acquire struggling logistics companies, including those in the digital technology (Logitech) sector. While not every company is a suitable investment, significant opportunities will exist. Additionally, it’s an opportune moment to attract top talent. As logistics companies seek ways to streamline operations, a surplus of talent is available at various levels, from top management to middle management and lower-ranking specialists. While not every candidate may be the ideal fit, the process of becoming leaner may result in some talented and brilliant employees currently on the job market.
6th Recipe for Success
Here are a few considerations for logistics and Logitech companies to navigate the current period effectively and accelerate future growth.
Advice for Logitech Companies
The primary advice for Logitech companies is to shift focus from merely offering features and options to concentrating on those that deliver measurable value or cost savings. For instance, while visibility is a nice-to-have option, saving costs on demurrage or enhancing service levels constitutes a value-generating option. Also, it’s best to avoid investing marketing funds in ads and pay-per-click strategies that generate leads that aren’t qualified to buy from you. Redirect attention and resources toward strategies that align more effectively with your business model.
How We Can Help Logistics Tech Companies: Leverage our marketing agencies and sales development consulting services to make informed decisions on where to invest funds for optimal Return on Investment (ROI). We provide valuable insights to help your organization allocate resources strategically and maximize the impact of your investments.
Advice for Logistics Companies
For logistics businesses, seizing the right moment during the market recovery is crucial. While it may not happen in 2024, given the long sales cycle for logistics services, now is the second-best time (with the first being a constant effort) to ramp up new and existing business development activities. Combining salesmanship with marketing activities is the fastest way to achieve this.
With Our Help, Logistics Companies Can Achieve Faster Results: We can assist logistics companies in creating sales and marketing strategies adaptable to both challenging and prosperous times. Recognizing that many logistics businesses lack a dedicated marketing team, we can fully take charge of this process efficiently and cost-effectively.
Another critical advice is understanding the shipper’s pain points and aligning services accordingly. This advice is for the current period and the years ahead. Shippers are grappling with new challenges, such as evolving supply chain strategies in response to increased geopolitical tensions. Shippers seek providers with the requisite knowledge and breadth of service to address their needs. Given the rapid changes, it’s wise for logistics business owners to refrain from investing in logistics assets or teams and, instead, consider outsourcing these processes. Being aware of these and other dynamics (like sustainability, service promptness, etc.), logistics business owners must prepare value propositions.
How Supply Chain Services Bureau Can Help: We offer keynotes on megatrend topics for logistics companies seeking to understand the unfolding landscape and how to adapt their operations. If your management board requires a second opinion or an action plan, we organize strategy sessions to help your organization choose the right strategy based on informed insights.
In navigating the years ahead, the paramount consideration lies in selecting the optimal balance between SPOT and contract markets. The current market dynamics, shaped by geopolitics, natural disasters, and war, have rendered the previously common strategy of relying solely on one sales approach (be it contracts or spot transactions) increasingly risky. It is crucial to recognize the significance of finding the proper equilibrium. Achieving this balance serves as a hedge, enhancing the profitability of logistics business operations and providing essential resilience in the face of uncertainties.
General Advice
Provide Your Sales Team with Needed Tools for Success. Over the past decade, sales employees have often been relegated to the roles of demo providers (in the case of Logitech) and straightforward qualifiers (in the case of logistics service providers). Their primary focus was making sales calls with little concern for techniques allowing them to close more deals. However, these outdated tactics are ill-suited for downsized markets and our rapidly changing world. Your employees require a modern sales process and the tools to support their actions to succeed.
How We Can Help Your Sales Organization: We specialize in providing sales training tailored explicitly for Logitech and logistics companies. Our logistics sales ninja training and subsequent coaching can empower your sales teams to secure more deals faster.
Downsized markets present opportune moments for organizational enhancements. Utilize this time wisely, as attention will shift to other priorities when the market rebounds and returns to growth. Consider these key change considerations:
1. Invest in Sustainable Business Practices: Sustainability is not just a buzzword; it’s a fundamental aspect businesses cannot overlook. Serious sustainability efforts are set to become increasingly influential from 2024 onward. Preparing for this shift is crucial, as it involves adopting environmentally responsible and socially conscious practices.
2. Digitize Processes: Digitization is more than just a trend; it is a transformative step that can significantly impact efficiency, cost savings, and service quality. The benefits of digitizing processes go beyond mere modernization; it enables organizations to streamline operations, enhance customer experiences, and adapt swiftly to changing market demands.
3. Invest in Artificial Intelligence Solutions: Leveraging artificial intelligence (AI) solutions becomes the next logical step. AI empowers organizations to extract valuable insights from vast data, facilitating informed decision-making. This enhances operational performance and opens new possibilities for innovation and competitive advantage.
4. Use Outsourcing Options: During a market downsize, the count of functions and tasks typically decreases. By outsourcing specific processes, organizations can save funds and become more flexible. Outsourcing provides a strategic approach to efficiently managing essential functions without the need for substantial in-house investments. It contributes to cost savings and allows organizations to adapt dynamically to the evolving business environment.
In summary, the Logistics Market Predictions for 2024 depict a landscape marked by challenges and opportunities. A swift recovery appears unlikely, but a potential shift towards a logistics service providers market is on the horizon. While asset-based trucking and Logitech companies face risks, this downturn offers a strategic window for new entrants and strategic acquisitions.
Moreover, downsized markets provide a platform for organizational improvements. Investing in sustainability, digitizing processes, and incorporating artificial intelligence solutions can address current challenges and position organizations for resilience and success in the evolving business landscape. Importantly, seeking external perspectives and expertise during these changes can bring valuable insights and save time in the decision-making process.
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