Supply Chain outlook 2023 - What can freight forwarders expect?

2023 started on a disruptive note across the globe. Be it rising fuel prices, economic downturn, inflationary pressures, natural calamities and even crumbling national economies across the world.

As a freight forwarder, you know that all these factors have an impact on the supply chain services and it is imperative to understand the trends that might shape up the supply chain services in 2023. We have collated a few important aspects that we think will dominate the industry and drive the next phase of transformation in the industry.

1. Friend shoring, Near shoring will dominate supply-chain

For most part of 2022, we saw new nation blocs emerging around the world. Some were formed to balance power, like QUAD, or some were revived for greater economic co-operation like the G20. The underlying idea for all these seem to be the same – ensuring greater economic and trade co-operation while keeping the supply chain lines open. With great geopolitical turmoils like Ukraine – Russia war, the economic issues in India’s neighbouring countries like Sri Lanka and Pakistan and rising COVID-19 cases, trade and supply-chains remain vulnerable.

The year 2023 will see greater impetus on friend shoring (trade links with friendly and like-minded countries) and near shoring (trade with geographically close countries). Countries will either try to be self-reliant or focus on friend shoring and near shoring to ensure robust and secure supply-chains. According to a research more 6 out of 10 global companies believe that geopolitical instability may have a detrimental impact on their supply-chains.

As a freight forwarder, it is time for us to reassess our assets and networks in these friendly and near countries to ensure business continuum.

2. Strong investment in technology and infrastructure

Digital transformation has touched many businesses and changed the way we work globally and the same is true for supply-chain industries as well. With greater technology incorporation, shippers and other cargo services can provide end-to-end visibility of the shipment.

Similarly, better infrastructure will help reduce time and improve the logistics services, thereby giving a push to the logistics and manufacturing industry. India is already working on better roads, connecting waterways and improving the port capacities. Similarly, countries like Indonesia and Vietnam have been investing and improving their logistics services in the past few years. Many emerging economies will follow suite and as countries around the globe continue to invest in labour/skills and ease of trade and logistics, there will be a higher chance of lowering trade costs and competing globally. As a freight forwarder it is important to invest in technology and upskilling of people to ensure seamless transition.

3. Greater investment in digitization and securing against cyberattacks

The logistics industry, historically relied on analogue and paper documentation and compliances, however the case in point is recent introduction of new logistics policy by India that places a far greater emphasis on integrating technology with logistics to improve ease of business. This initiative to digitize logistics industry will continue and will find greater acceptance in the coming year.

This new national logistics policy has four key components: Unified Logistics Interface, Integration of digital systems, ease of logistics and System improvement group. Successful implementation will have a far reaching impact on countries logistics operations.

Developed countries like Germany and USA with a robust logistics system, will have to protect their supply-chain’s against cyber attacks. In the current geopolitical situation we have seen that though a traditional war is unlikely, attacks on a country’s strategic assets through cyber attacks is growing. Trade and economic stability are crucial for any country’s long term growth and hence it is important that the logistics industry invests in cyber security. It would make business sense for freight forwarders to have a technology division that focuses on building secure in-house digital interfaces.

4. Sustainable supply-chain solutions in focus

Sustainability is not just a buzzword anymore. It is the need of the hour and more and more organizations are moving away from greenwashing and focusing on achieving important sustainability goals. While a freight forwarder can do very little in his own capacity to achieve sustainability, it is an important trend that needs thought, as according to research, 53% of organizations plan to increase their focus on sustainable sourcing. Freight forwarders need to focus on aligning their business to green goals by ensuring low emission in their organization and building a network of vendors and shippers who are sustainable and have a lower carbon footprint.

5. Time to build strong partnerships

In today’s era of hyperlocal and quick-commerce, customer expectations are high. While the supply-chain challenges in terms of cost and congestions still continue, the suppliers and local retailers are reviewing their distribution channels. A freight forwarder who can support them in enabling a unified commerce would be an asset for the business. It is time to look for strong partnerships in allied businesses like 3PL, last mile delivery, cold-chain containers or fleet etc. This will ensure credible services with competitive pricing.

We believe that the coming year will be a year of transformation for supply-chain. With lessons learnt from the past few disruptions, the entire supply-chain network is focused on resilience and growth in 2023.