Hit or a Miss? Logistics President Takes a Swing at Transportation Industry Predictions for 2023

2022 was a heck of a ride. Now that the year is coming to a close, it is time to reflect on my 2022 predictions, and form a hypothesis for 2023. This is the 3^rd time that I have published these predictions, though my previous two attempts tell me that my crystal ball may be a little hazy. I thought my 20-year logistics career would help, but I guess the future is just hard to prognosticate.

We started the year still in the peak of the COVID supply chain crisis, with shipping demand starting to fall off in late spring/early summer. Meanwhile, interest rates rose to reduce inflation and freight demand dropped a bit in the 2^nd half of the year, leading to reductions in cost per mile.In recent months, we have seen many transportation leaders announce layoffs and as we move into 2023 there is no clear path which way the economy will go.

I would like to highlight that for the 2nd year in a row my sports prediction was a success. The Golden State Warriors got on a roll in the playoffs and won their 4th NBA Championship in the last 8 years. I also predicted that Steph Curry would win the MVP in the regular season and finals. Although he ended up missing almost 20 games of the regular season which took him out of that contention, he got it done in the finals and won his first Bill Russel trophy. Yet again, I did not bet any money on it so it’s hard to brag when I was unwilling to put my money where my mouth was.

2022 Container Pricing Fell as Predicted

Ocean freight is the transportation segment that saw the biggest cost increase during the COVID supply chain disruption. Rates for trans-pacific shipments jumped nearly 10x at their peak. This led to some serious creativity in the segment; shippers began chartering their own vessels to ensure access to capacity. And then as expected, we saw rates drop in the second half of the year.

Last year, I predicted trans-pacific costs would drop below $15k in the second half of the year. I was a little gun shy with how quickly these prices had increased in 2020 and 2021. But I guess you can say that I made the lay-up as recent costs have been below $5,000 for a 40-foot container.

Recently, steamships have canceled voyages to reduce capacity so it’s uncertain if prices will drop much further. That said, some businesses in 2021 discussed plans to diversify their supply chains in other parts of the world to avoid a repeat of the COVID supply chain crisis. This could lead to a different demand level in trade lanes and cause additional changes to current capacity and routings by ocean carriers. It goes without saying, this segment should be watched closely in 2023.

TEU Capacity to Drop Slightly in 2023

Our prediction for 2023 will be a little more specific. According to data provided by Descartes Datamyne, the peak U.S. container import volume (TEUs) in 2022 was about 2.6 million in the month of May. We will say in 2023 the industry will peak at 2.3 million import TEUs.

DAT Monthly Van Spot Rates

Predictions for Dry Van Rates in 2022 Spot-On

In 2022 we predicted that spot Dry Van rates would peak at $3.17 per mile and we were close on this one with the peak in January at $3.10 per mile. Now this means I would have lost in “Price is Right”, but I was only 2% off. Outside of my sports predictions that is as close as I have been.

Dry Van Rates to Continue Dropping in 2023

With the rates continuing to drop as we roll into 2023, we expect the rate per mile to continue to drop below 2022 levels. I feel confident the new year will see a peak of $2.62 a mile for dry van. This drop in rates will unfortunately impact smaller carriers who may have entered the market in the past year or so.

Class 8 Truck Orders

2022 Order Volume Higher Than Expected

The original equipment manufacturers (OEM’s) were really struggling with supply chain challenges due to delays in international shipping from Asia in 2022. We expected that to clear up (which it has), but didn’t realize the extent it would open up in the 2nd half of the year.

Our prediction was a peak order volume of 49,000 but we ended up seeing 56,000 in September of 2022.

Peak Order Volume to Reduce in 2023

As we look forward to 2023, we will see freight demand struggle to match the capacity buildup that occurred in 2021 and 2022, which leads me to believe that peak order volume will drop next year. In effect, we will predict a peak class 8 truck peak order volume of 38,000 for the coming year.

Fuel

2022 Diesel Pricing Higher Than Anticipated

I predicted that the National Average for Diesel would peak at $3.91 a gallon in 2022, which seemed like a decent guess for about 2 months. But the peak in the week of June 13^th ended up coming in higher at $4.84 a gallon. So at least in “Price is Right” I would have had a chance, but I was still off by 93 cents, meaning I missed the target by 24%.

Holding Steady With 2023 Pricing Prediction

Forecasting fuel costs is no easy task with all the global macroeconomic factors that can lead to changes in pricing.For the new year, we are going to bring back the $3.91 a gallon peak estimate and see if it gets us a little closer.

Going for Another Touchdown

Can I make it 3 years in a row with my sports pick? My initial thought is probably not, but let’s give it a shot anyways. We predicted baseball in 2021 and basketball in 2022. For 2023 we are going to give the pigskin a throw.

The San Francisco 49ers will win their 6th Super Bowl championship on February 12, 2023. This would require rookie quarterback, Brock Purdy, to lead the team to the title, which has never happened in NFL history. With this outcome, Brock will give Niner Nation their first title in 28 years.