The economy is currently experiencing a “slowcession,” as the freight industry pushes through what feels like a recession, according to data released by ITS Logistics. In addition, wage rates and access to general warehouse labor continue to show an overall reduction, but the industry will still need to pay well above the average for good talent.
“Over the past few months, the supply chain industry has experienced an imbalance with supply and demand for the movement of freight, which has resulted in very challenging conditions,” says Ryan Martin, president of assets for ITS Logistics. “Although true, GDP grew at an annual rate of 2.1% in the second quarter of 2023, and growth in the third quarter rounded out at a robust 4.9%. From this information alone, it shows that we are not in a recession, but instead experiencing a ‘slowcession.’ We are finding ourselves in a sluggish economy that doesn’t quite tip over into a full on recession.”
- The Index confirmed that, for a lot of shippers in the market, spending is still there, but it’s being driven mostly by higher prices, not necessarily by more units moved. When considering space/vacancy, certain markets continue to drive significant activity, but most have started to cool down, and delivery of new buildings has either been pushed out or been placed on hold due to these current inventory levels.
“There is a domino effect when the supply chain experiences a disruption,” adds Martin. “One of the impacts that this current economy is having on supply chain companies is finding that they still need to pay well above the average for good talent. We estimate that most employers need to add $2 an hour to these figures if that employer is over 15 miles from a major population center. Remote work is also seeing the most activity with certain openings, garnering hundreds of applicants within days of posting.”