Transportation Outlook for 2022 and Beyond

2020 – 2022: major disruption

During the pandemic we have seen major disruption in the transportation industry. The operation of the transportation chain itself was disrupted (due to lock downs, sickness, assets in wrong location, and less belly space availability). Also, the supply of goods was disrupted, creating a further shock to the transporation industry. As a result, capacity on container vessels decreased and container rates sky rocketed (as did profitability of the shipping liners. Airfreight demand went up especially for high value and time critical goods as well while supply dropped (due to, again, less belly space availability), resulting in shortage, backlogs and higher orders for freighter aircraft and passenger to freighter conversions. Now that COVID-19 seems to be turning into an endemic disease, the big question is: what does this mean in the long run? What can we expect for 2023 and beyond?

From global sourcing to local sourcing

Actually, we expect that there will be no major capacity-related issues in 3 years’ time. Both in container transport and in airfreight, capacity is increasing. So in that sense, it will be business as usual within a couple of years. However, within manufacturing and consumer business, awareness is growing that there are a number of issues within the global supply chain that need to be fixed. The last two years have shown the vulnerability of global sourcing – with suppliers all over the world, there’s always a risk that you can’t deliver your products. More and more companies are now looking for suppliers and production sites closer to “home”. And once they have made that switch, it’s unlikely that they will move back to global sourcing.

Combatting supply chain disruptions

Also, there’s a trend towards insourcing logistics. Many businesses that have been outsourcing their logistics in the last few decades are now buying and driving their own trucks to increase their control over their supply chain and be less vulnerable with regards to capacity challenges. At the same time, a number of (e-commerce) players have decided they don’t want to depend on a few large shipping companies anymore. They are chartering their own vessels to deliver their goods from Asia to Europe and the US, choosing the most efficient route and increasing the reliability of their goods flow.

Challenges and opportunities in the “last mile”

Global e-commerce players are changing the face of transportation in other ways as well. They are insourcing more and more transport as they have developed the scale to run these effectively. Key examples are: setting up their own network of flight connections, linehaul networks and last mile delivery. Especially in last mile delivery the impact on the major parcel delivery players is high. Their position is under pressure anyway. For instance, there’s the growing annoyance within dense towns and cities where delivery vans from various companies are occupying precious room. As consumers, we all like new convenience concepts, but as citizens, we are very much aware of the drawbacks. Governments are pushing for more cooperation between delivery companies, challenging their existing model.

Consumers and convenience

Next to the – temporary and permanent – disruptions in the transportations industry itself, the pandemic has also increased shifts in consumer preferences and mindset. These are recorded and analysed in Deloitte’s Consumer Tracker. Of course, consumer behaviour was already undergoing major changes before 2020, but the pandemic has accelerated many trends. For instance, online shopping increased dramatically between 2020 and 2022. Now that physical stores are open to the public again, the numbers are decreasing, but they are still substantially higher than before, and will remain so. Additional groups of consumers have discovered the convenience of online shopping, and the online offering has improved. More and more supermarkets have their own delivery service, and ultra-fast delivery services are on the move. Their target group – mostly younger generations – and their product range is expanding, so there’s no doubt that they’re here to stay. Another convenience concept, “same day delivery”, also has a lot of potential. The concept of “click and collect” proved popular during the pandemic, but with the improvement of the delivery convenience (estimated delivery time window, reroutes, more pick up points, more lockers), click and collect seems to be less future-proof.

The gig economy

A factor that could put the brakes on the rapid development of these concepts is talent. Currently, the disruptions caused by Covid-19 and the lock downs have
had a major impact on the availability of professionals who work in the transportation industry. Even before the pandemic, the labour market was tight,
but now the situation is even worse. It is quite a challenge to find enough (young) people who are interested in these types of vacancies, which can be a huge threat to the logistic throughput, especially – again – in the last mile. It is
closely related to the theme of the ”gig economy”: an economy where temporary and flexible jobs are commonplace and companies tend to hire independent contractors and freelancers instead of full-time employees. What does this mean in terms of employment agreements and employee experience, including employee engagement, tools and technology, and training? This issue should be high on the agenda of HR leaders and their teams in order to build a future-proof organisation.         

Future editions of the Consumer Tracker will certainly indicate more trends and
perspectives, so discover the Tracker to find out more.

Deloitte State of the Consumer Tracker

Since March 2020, the world has moved through a collective human experience that is shaping and shifting consumer priorities, purchase behaviours, preferences, and spending decisions. The Deloitte Consumer Industry Center continues to collect data and analyse it to better understand the shifts in the current consumer mindset and explore the potential implications for a postpandemic world. This exploration has prompted new questions, new data, and new insights. In the coming weeks and months, we’ll continue to lean into the implications and unpack our initial observations. Please find our latest results in our interactive dashboard Consumer Tracker to explore additional data by country and age.

More information?

Do you want to discuss your challenges and opportunities, please contact Willem Obermann via the contact details below.