The transportation and logistics sector has faced unprecedented challenges due to drastically increased demand, changes in supply chain patterns, and asset and labor shortages. These challenges have led to dramatic increases in pricing across the industry both for customers as well as market participants. While market participants have adapted, long lead times for equipment coupled with changes to the supply chain due to increased protectionism have reduced the industry’s ability to react. Customers and consumers have struggled with the new pricing environment and the industry has drawn increased focus from governments due to the increased logistics costs and subsequent contribution to inflation.
Labor shortages, especially in trucking, have been exacerbated by recently implemented electronic logging requirements and the implementation of the Drug and Alcohol Clearinghouse. Plans to allow younger drivers should help allay some of these issues but may increase safety concerns for an industry already struggling with heightened insurance rates. Companies will need to leverage technology to overcome these challenges and improve margins. Suppliers to the industry must adapt and shorten their supply chains to mitigate the impacts of disruptions and increased tariffs which have changed the competitive landscape.
Companies must adapt to the increased focus on the energy transition, both in how this will impact equipment in the future with the potential adoption of electric, hydrogen, or other alternative fuels for equipment, and how it will impact the business models of companies focused on the transportation of crude and refined products.
The transportation and logistics industry has seen the entry of many non-traditional technology competitors which have the potential to revolutionize LTL and containerized shipping. In more complex project logistics, project specific needs, and the high value placed on customer service and the ability to respond to challenges will likely slow adoption. Technologies that allow companies and customers to optimize fleets of trucks, containers, and tanks and minimize waiting times are much more likely to have a near-term impact.
The marine industry is seeing unprecedented demand in the container and breakbulk spaces which ageing fleets are struggling to meet. Rates have increased to levels that have led many companies to consider reducing their reliance on international shipping. Containers and other assets continue to be difficult to source. While ship orders are increasing, shipping lines continue to be disciplined after the last building cycle led to years of depressed rates. Long lead times mean even with new ordering activity new build activity will take years to impact the market.