Looking Ahead: Global Logistics in 2024

The world economy in 2024 is expected to outperform previous projections according to Goldman Sachs Research, with worldwide GDP forecasted to expand to 2.6% next year. While some economists are optimistic about global economy recovery, the logistics sector may be slower to catch up. Many logistics professionals are predicting no growth in the first half of the year, and S&P Global’s 2024 outlook report states that supply chain resilience will remain important in 2024.

So, what does this all mean for global shippers?

With risks to navigate like trade protectionism; international conflicts; leadership elections in Mexico, the United States, Indonesia, Singapore, and Japan (to name a few); labor strikes; and droughts worsened due to a severe El Nino, global shippers can easily be overwhelmed with uncertainty. The reality is we can’t predict the future and plan for each scenario, but working resiliency into your supply chain remains key to staying adaptable and nimble when planned or unplanned disruption occurs.

The million-dollar question is: “What can we expect in 2024?” I believe the need for resilience and diversification will be critical. To understand why, and how best to prepare, I’ve outlined some key market trends for global shippers to watch in 2024.

More traditional global logistics patterns are returning

The softer freight market in 2023 helped many markets, primarily air, return to the more cyclical patterns from 2019 and earlier. From there, more consistent ordering patterns followed. These more consistent ordering patterns will carry over into 2024. This, combined with a break from the pandemic backlogs, is also giving shippers a chance to rethink their supply chains based on other factors, such as shifting consumer behaviors.

For example, we worked with one customer in Latin America to help reconfigure their supply chain based on a significant change in consumer demand. While thousands of working vehicles sat in their parking lot because high interest rates slowed sales for vehicles, their parts business was experiencing a huge spike. A quick reconfiguration helped them capitalize on the new demand while also setting the foundation to achieve more consistent ordering patterns in the future.

Ocean and air transportation capacity is expected to adjust to more traditional levels throughout 2024. Over the past two years, and well into 2024, new ships were introduced to meet new emissions guidelines and replace older vessels, and many planes were pulled from retirement to meet the capacity need for shippers. As demand shifted, ocean carriers have used tactics like slow steaming and blank sailings to help control capacity, but it’s unlikely there will be enough demand to absorb the additional capacity before the second half of 2024 at the earliest.

On the air side, the industry has had an abundance of capacity available through third  party charters over the past few years. However, many of those charter agreements will likely come to an end in 2024—which would further level supply and demand—and more traditional ways of purchasing air space via cargo planes and belly capacity through airline carriers will return.

The global landscape can shift quickly, impacting supply chains

While the return of cyclical and traditional patterns is a relief, shippers should remember that disruption can happen quickly and often unexpectedly—even in a traditional market. While disruptions aren’t new, 2024 does hint at them presenting more unique challenges.

For instance, strikes have significantly increased, particularly in the United States where they almost tripled in size in 2023 compared to 2022 according to a study by Cornell University. As labor contracts expire, such as the International Longshoremen's Association (ILA) on the United States and Canadian east coast in September 2024, other organizations could follow suit, leading to elongated negotiation periods and disruption.

In 2023, there were more international trade changes than ever before, including stricter regulations on forced labor and increased trade measures controlling exports and imports as geopolitical tensions increased. Going into next year, shippers will need to continue to stay up to date on trade changes to remain compliant.

It's not just risks that are altering the global landscape. Trends like reshoring and nearshoring, particularly in Southeast Asia, India, and Mexico, are contributing to the shift in the flow of freight. And with nearshoring helping to strengthen supply chain resiliency, it’s unlikely to slow down in 2024.

According to a survey by Accenture, over the next three years 78% of companies will use multiple sites to produce products compared to 41% in 2023, and 72% plan to utilize multi-sourcing strategies compared to the 42% that are doing that today. Most nearshoring activity thus far has been led by automotive companies and suppliers, but healthcare and other industries are becoming larger players as the trend continues.

While there are many factors for companies to consider when nearshoring, including new supplier vetting, infrastructure, and punitive trade measures, companies that are not nearshoring also need to be prepared for this shift.

For example, those who have been shipping between the United States and Mexico for years could start to see delays at the border due to increased volumes from the nearshoring boom in Mexico. New strategies and contingency planning are critical now as this trend continues to gain speed and reshape the logistics landscape.

Sustainability continues to be top of mind amid new regulations and company goals

A heightened focus on corporate sustainability goals and new regional regulations from the European Union (EU) is putting sustainability top of mind for many shippers and carriers heading into the new year.

For example, under the EU’s Carbon Border Adjustment Mechanism (CBAM) law, all EU importers need to report carbon emissions related to the production of certain products. Additionally, starting January 1, carriers shipping to, from, or within the European Economic Area (EEA) are subject to the EU’s new Emission Trading System (ETS) regulations, which were expanded to include maritime shipping.

Many ocean carriers have already made progress towards more sustainable shipping, including using slow steaming to meet emissions standards like the 2023 IMO GHG Strategy and introducing a variety of different biofuels such as ammonia, methanol, and recycled cooking oil. However, the new requirements from the EU could lead carriers to adjust schedules, implement surcharges, or make other changes to meet their sustainability goals, and this would inevitably impact shippers.

The air transportation industry is also making progress with innovative solutions such as sustainable aviation fuel (SAF) and testing power-to-liquid technology (PTL); however, these technologies are not available at scale at this time.

Sustainability is a journey. I encourage you to work with your logistics provider to develop strategies that will address your emissions challenges and, ultimately, help you meet your sustainability goals. A great first step is utilizing Emissions IQ to establish a baseline for your carbon footprint and to identify those areas for potential emissions reductions. If you’ve already established a baseline, our industry experts combined with our breadth of sustainability tech tools can help you go further on your sustainability journey.

The themes above are just part of what’s driving decisions and shaping the global logistics landscape in 2024. While these approaches can help start the conversation on building further resiliency into your supply chain, specific strategies vary greatly depending on the regions you’re shipping to and from, the commodities you’re shipping, specific goals or company changes, and more. Connect with a logistics expert to build a strong and resilient plan unique to your needs.

Mike Short
President, Global Forwarding
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