Possible Causes and Solutions for the Soft Shipping Market

May 13, 2022

Truck and money

Recent shifts in the shipping industry have seen capacity loosen for many reasons. As shippers and retailers have adjusted their supply chains to keep pace with ongoing disruptions, inventories have finally started to normalize. In some segments, shipping slowdowns can be chalked up to normal dips in seasonal demand. And of course, there is no part of the economy that is immune to the forces of inflation.

Increased fuel prices and decreased consumer demand for goods due to inflated prices will carry through to freight demand. In the face of these growing concerns, many shippers have chosen to increase their rates, further contributing to a slack market.

Though the factors contributing to a sluggish shipping market are numerous, some of the causes of current conditions might only be temporary.

What market factors are driving the recent dip in shipping demand? Watch Episode 8 of the Stay In Your Lane Podcast to learn more.

“I’m not going to say the market is fragile, but you get a couple of weather events, and you can see the market turn pretty quick,” says Joe Lombardo, President and Founder of strategic transportation consulting firm Ege Avenue Associates.

As Joe points out, flagging demand in the shipping industry can sometimes be affected by something as fickle as inclement weather. Slowdowns caused by events such as the end of the holiday shopping season can also make shipping capacity seem relatively loose. Whatever the case, forecasting trends remains all but impossible in the face of continued industry-wide turmoil. Complex geopolitical issues such as manufacturing delays caused by China’s “zero Covid” policy and the ongoing conflict in Ukraine further complicate an already unpredictable situation.

“It’s a crapshoot when you’re trying to predict the market in these kinds of conditions,” says Joe. “In a normal time, it’s hard—in these times, it’s probably impossible.”

Are some regions hit harder by shipping challenges than others? Find out in Episode 8 of the Stay In Your Lane Podcast.

As with so many problems in modern shipping, strong communication between stakeholders will be key to addressing the decline in shipping demand. Given the ever-shifting nature of market trends, conversations that drive efficiencies across perspectives will be more important than ever—as will a willingness to compromise.

“If you have a good relationship with your carrier, if you’re truly a partner, a carrier can come to a shipper and say, ‘things are little soft here, if you can help me, I can help you,’” explains Joe. “If you’re a shipper that’s traditionally beaten the crap out of carriers, you’ll never get that.”

In the right conditions, capacity for transportation demand can rise very quickly. To be ready for whatever the market has in store, it’s important to cultivate strong working relationships with partners you can trust. For dependable third-party logistics brokerage services to help shippers and carriers meet any demand, look no further than the experts at Triple T Transport. Contact us today to learn more.

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