With lots of changes on the horizon, the freight shipping industry has a tough road ahead in 2017, but there is reason to think the next several years could bring relief. In this article, we’ll take a look at the big challenges for the upcoming few years and how they will affect freight shipping best practices.
The Big Unknown: The Economy
The health of the freight shipping industry is largely dependent on a robust economy, which fuels growth for the entire transportation industry. At the time of this writing, macroeconomic forecasting is practically impossible, given the numerous and far-reaching issues that are very much unsettled. These include:
The Recent Brexit Vote
Much doom and gloom is being predicted, and yet equity markets are trading at all-time high levels. The truth is, the full impact of Brexit will take years to unwind, and many decisions are yet to be made that will cause the ultimate economic impact in a very good or very bad way. For instance, will Brexit create a ripple effect leading other countries to leave the EU and create economic chaos, will it drive reforms to make the EU stronger than ever, or will the result be somewhere in between? Only time will tell.
Political Uncertainty in the U.S. and Elsewhere
Political and social tension in the West has not been this pronounced since the 1960s. With political uncertainty ahead, businesses tend to put off big strategic decisions, which has a cumulative effect of dampening expansion, growth and risk-taking of any kind.
Economic Indicators Continue to Send Mixed Signals
To cite just a couple of examples, technology innovation creates new jobs and massive operating efficiencies, but governmental regulations add red tape and costs, and put a drag on growth. For months, crude oil prices have been at the bottom of the barrel — they are being blamed for weakness in the economy when equity markets contract and credited for growth when they expand.
One way or another, 2017 figures to present a clearer picture of the near future than 2016 is able to provide. In the freight shipping industry, look for companies to create new strategies and implement big changes in 2017 and 2018, not this year.
The Future of Freight Shipping: Industry Challenges
Major challenges loom for the freight shipping industry, but it's not all doom and gloom. There are other factors and issues that will offset any difficulties posed by these challenges, suggesting that there is plenty of reason to be optimistic.
Driver shortage. With many drivers retiring or seeking employment elsewhere, there is a chronic shortage of drivers in the U.S. This makes expansion difficult for freight shippers and creates a host of operating problems.
Deteriorating infrastructure. Anyone who drives knows the condition of roads in the U.S. is not what it should be. Poor road maintenance leads to more shipping delays, more truck and trailer damage, and more accidents — all of which combine to increase operating costs, and reduce margins and customer satisfaction.
- Increased regulations. More governmental regulations affecting transportation, health care and general business conduct add cost and divert attention and resources from business strategy and innovation.
Driverless technology. We probably won’t see much of this in 2017, but in the years ahead, driverless technology figures to help freight shippers get out of the driver/capacity bind.
- Intermodal shipping. As the global economy expands, air and sea shippers are partnering with LTL and FTL shippers to bring products anywhere and everywhere in the world — creating new business and new business model opportunities for freight shippers.
In 2017 and beyond, freight shipping best practices will include a commitment to technology, openness to new business models and tough yet imaginative approaches to operations management.
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