Inflation And Transportation Cost Are Expected To Rise In 2023
Similarly, as in 2022 the topic of inflation and transportation cost is once again center stage. Inflation disrupts freight markets in many ways. Mainly through higher retail prices for everyone. However, inflation also causes hidden damage by discouraging new investment. Therefore, capacity concerns for those who ship via freight should be prepared.
Inflation And Transportation Cost Causing Capacity Concerns
Freight delivery cost sored in 2022 because of a lack of capacity. Hence, supply and demand. However, that was largely due to the pandemic. There was simply not enough available freight carriers to meet demand. Understandably, because many drivers and companies closed for good during that time. Therefore, the cost to ship freight increased. However, present day the situation is different.
Inflation Disrupting Freight Deliveries
Unfortunately, the only way to fight inflation and transportation cost is through higher interest rates. Although, this seems counter intuitive it is the only way. However, if borrowing money is more expensive trucking companies buy less trucks. This sets off a chain of events where many newer trucking companies will not survive. As interest rates rise the growth of the economy slows. If there is less freight some carriers may not be able to sustain themselves.
When Will Shipping Prices Go Down?
So when will shipping prices go down? That is a difficult question to answer. But, if inflation is not controlled the federal reserve will continue to increase rates. Therefore, to ship freight on time may be more challenging. Despite, lower fuel cost shipping & freight cost will remain high. There will be more pain in the form of higher shipping rates throughout 2023.