Back in January of 2021, we here at 3rdwave hosted a webinar that featured predictions specific to the transportation & logistics industry. For the record, our accuracy was pretty good, with roughly 70% of what we forecasted actually coming to fruition. Whereas 3rdwave will be hosting a “2022 Predictions” webinar on January 13th, I also wanted to get out in front of that event by publishing a blog on the same topic.
To be honest, some of my 2022 predictions are a continuation of what came to be in 2021, so a fair amount of what you’ll see here is related to how long existing issues will remain in play. On the other hand, you’ll also see some new prognostications that are important in and of themselves, but that will also come to influence the dynamics of existing market conditions.
So, in the spirit of really not knowing how things will actually pan out, below is what I consider to be a reasonable representation of the key events, trends and outcomes across the 2022 transportation & logistics landscape.
Supply chain disruption and delays will be around for as long as Coronavirus is.
Global supply chains were never designed to absorb the starts, stops, lulls and surges born of COVID-19. Given the growing list of new variants and the chaos that’s going on right now, rest assured that what we’ve experienced over the last two years will continue throughout all of 2022.
Climate Change events will test supply chain & logistics networks throughout the year.
At the risk of coming off as “Mr. Doom & Gloom”, it has to be stated that Climate Change events in 2022 will make supply chain troubles even worse. There’s no way of knowing what they will be, but things like wild fires, mega-snow storms and flooding will hobble logistics networks, for sure.
“Front Loading” by importers will exacerbate delays and keep freight rates high.
When importers don’t trust their supply chains, they order merchandise from their overseas vendors sooner than they need them, and in greater quantities. Given that importers are placing purchase orders in Q4 of 2021 for the arrival of product in time for Back-to-School 2022, expect congestion to continue and rates to stay high.
Ocean carriers will prop up rates through blanked sailings.
Even if consumer demand for imported goods tanks in 2022, the steamship lines will artificially prop up rates by cancelling sailings. While we might not see FEU rates from Asia to the U.S. in the $25,000 range, rates will not go below $15,000 per container in the Trans-Pacific Eastbound trade.
Access to containers for U.S. export freight will tighten even more.
In spite of what the FMC is saying, U.S. exporters in non-coastal areas will have an even tougher times getting equipment. With carriers insisting that bills of lading terminate at a discharge port and transload experiencing exponential growth, there will be a stronger reluctance to let containers terminate at inland destinations.
The Section 301 Tariffs will be in effect for all of 2022.
I made this prediction in 2021 and it was one of the ones that rang true. A combination of bad optics for the Biden Administration (i.e. eliminating the tariffs would label the President as a “China Sympathizer”) and the fact that the U.S. Treasury is tapped out, guarantees that the Trump Tariffs will continue.
Major 3PL investments by ocean carriers will inspire other traditional, as well as non-traditional acquisitions.
Ocean carriers have made their strategic intentions known through acquisitions such as Maersk buying the logistics arm of Li & Fung and CMA CGM buying Ingram Micro. You can be sure that this is the tip of the iceberg in the carrier space, but we’ll also see more acquisitions by traditional 3PLs who feel their territory is being encroached upon.
In the realm of non-traditional transactions, Beneficial Cargo Owners will also look to take control of their own shipping destiny by either buying existing forwarders and customs brokers, or starting their own NVOCCs from scratch. My prediction is that BCOs will opt for the purchase of small-to-medium sized forwarders that they can quickly “plug & play”. As a proviso, if BCOs think they’re going to get rich by creating another revenue stream, they’ll be sadly disappointed.
“Non-Traditional” Venture Capital and Private Equity money will pour into the digital supply chain space.
Well before the advent of COVID-19, there was a healthy eco-system of digital startups, the VC firms that funded them and the PE houses that scooped up the successful players. With “all things supply chain” now the rage, expect VC and Private Equity money to pour into the industry from parties that don’t really know that much about it.
As a prediction, the pool of startups with a solution that actually works will be far smaller than the amount of money getting thrown around, so valuations will be big, but for every successful investment, there will be dozens more that flame out.
So, this is my admittedly incomplete list of 2022 predictions for the global transportation & logistics industry. Clearly, the underlying reasons why I believe the above predictions will come true are too numerous to list in a blog post. By no coincidence, if you’re interested in hearing the rationale for what’s been presented here, you’ll need to tune into the live broadcast of the 3rdwave webinar on January 13th, where I’ll elaborate on each and every one of them. You can register for that webinar here.
While I’ll acknowledge that a good percentage of my divinations will not pan out, at the very least attendees will have a broader frame of reference on the year ahead, and perhaps be in an enhanced position to plan their own strategies for 2022.