Supply Chain Improving but Recession Could Be a Step Back

supply chain
Author PhotoBlueGrace Logistics

BlueGrace Logistics’ COO Adam Blankenship says shipping costs are stabilizing “after a period of historically high levels for the past couple years.”

Louis Llovio | Business Observer
January 06, 2023

1. While major supply chain issues have created massive bottlenecks that have affected nearly every industry since the pandemic began in 2020, Adam Blankenship says more capacity exists today than at any point over the past 24 months.

The Tampa logistics executive with BlueGrace Logistics, one of the leaders nationally in third-party shipping, says in an email that as the “playing field levels” customers and shippers are regaining pricing power and leverage.

Because of this, he says shipping costs are stabilizing “after a period of historically high levels for the past couple years.”

But it’s not only pricing that’s improving.

With networks running at less than full capacity, he believes service levels will return to, or even improve from, where they’ve been historically.

“I expect some bumps in the road in the year ahead, so more robust understanding and usage of your data is key to building the most built-proof shipping/logistics plan possible.”

2. The improvements are happening as inventory levels seems to be shrinking, meaning more companies will be shipping if the economy shows resilience or a faster than expected recovery.

Blankenship says shippers that understand their supply chain needs and can build more flexible demand plans will be in a much better position “to leverage softening rates and improved service levels.”

“Additionally,” he says, “I expect some bumps in the road in the year ahead, so more robust understanding and usage of your data is key to building the most built-proof shipping/logistics plan possible.”

3. Blankenship worries though, as do many, what a recession could look like.

He says a worse-than-expected recession could hamper logistics space growth and labor shortages could return faster than expected.

This, coupled with inflation at present levels, could continue to push more drivers out of the market and “create capacity constraints again.”

His fears could ease once there is a better sense of how things will shake out with economy and there’s a better sense of what a possible recovery will look like.

“Clarity on depth and severity of a recession will lead to additional shipping and push toward e-commerce,” Blankenship says.

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