As the transportation and logistics industry emerges from the global COVID-19 pandemic and the pain it inflicted on the supply chain, we now face new challenges and an uncertain economy in the coming year.

Following are six trends we can expect to see in 2023. 

Merger and acquisition activity will continue into the new year. During the pandemic, logistics companies grew by size and revenues as never before, gaining attention from private equity firms looking to invest in fast-growing firms, as well as owners looking to exit when valuations were at all-time highs. But other factors came into play as well, including the state of the economy, to drive merger and acquisition activity.

According to a mid-2022 report by PwC, “The high level of M&A activity in the transportation and logistics sector is expected to continue in FY 2022 as companies address a number of challenges. Due to uncertainties related to new COVID-19 variants, the war in Ukraine, material and equipment shortages and overall supply chain disruptions, many companies are considering near-shoring opportunities and attempting to gain more control over their supply chain.”

“While M&A is slowing down, there are still many businesses looking to acquire or be acquired,” says Peter Rentschler, chief executive officer of Metafora, a consulting and technology company that specializes in the transportation and logistics space. “We’re seeing private equity firms that aren’t already invested in logistics back away, which will lead to a higher number of strategic acquisitions where a larger company will buy a smaller one that brings a new customer footprint or service offerings.

“With M&A activity comes workforce optimization,” Rentschler continues, “which is the ideal time to examine overall people strategy and could include outsourcing.”

Logistics companies are expanding offerings and investing in smart implementations. To gain competitive edge and provide more value to customers, logistics companies are increasingly expanding the services they offer — and they’re investing more to ensure proper implementations. 

According to an Accenture research survey of logistics executives, the most important driver of change in the industry today is evolving customer expectations. The report states that logistics companies believe their customers want them to offer a broader set of logistics services, “either extending their service portfolios to include upstream and/or downstream solutions, or expanding their existing services across more geographies, industries, or modes of transport.”

“We’re seeing a lot of companies looking to expand services to better support their customers and as new avenues to growth,” Rentschler says. “This is an ideal time to consider alternative or creative business models that may include outsourcing labor to reduce the investment for the new service and reduce capital outlay and risk.”

From an implementation standpoint, Rentschler says, organizations are becoming smarter and more mature, while looking to consultants to make sure that the implementation goes well. “We’ve seen businesses spend money on new technology or move roles offshore, and they get 5% of the potential ROI out of it because they didn't properly invest in implementation. A trucking company will buy a truck and know exactly how much money it will make, but they overlook investments such as technology or outsourcing where they can gain a 10% efficiency across the entire business.”

Carrier cycles are normalizing. During the pandemic, it was oftentimes a mad scramble to find a carrier — any carrier — to transport a load, and the cycles were abnormal and difficult to predict. Despite the current economy, expect a return to more normal cycles, and the ability to be more selective in choice of carriers. 

During the pandemic, a carrier shortage resulted in an influx of new and small players, which brokers and shippers were forced to hire regardless of quality, says Cassandra Gaines, chief executive officer of Carrier Assure. “The brokers and shippers who came into the industry during COVID-19 do not understand the normal cycles of our industry and are beginning to experience how it really works. Capacity is stabilizing, so brokers and shippers can be more selective in finding the right carrier for the load.”

“The industry is very cyclical and very volatile,” says Brandon Bay, vice president of corporate strategy and marketing for Logistics Group International. “One week, your volume and margins are up; the next week, the bottom can fall out. You have to adjust very quickly. Finding vendors and clients to keep your business consistent is key.”

Companies will continue to embrace remote-work options. Demand for logistics and transportation talent is at an all-time high. It was an issue before the pandemic or great resignation, and has only gotten worse. Companies are deploying multiple tactics, including improvements to benefits and workplace culture, to attract and retain talent. Remote work was one of the most important options during the pandemic, and might still be essential to luring a workforce that expects it.

“The pandemic changed how people work,” Bay says. “It forced our company and others to learn how to work remote. But it also created a problem, in that we now have a highly mobile workforce that brings a sense that employees can easily change jobs without relocating — they just get a new laptop and continue working wherever they are. This, in turn, leads to further investment in compensation, incentives and benefits. You invest a lot in training and want to advance your employees’ careers. But the mobile workforce also puts pressure on retention and growing and scaling teams, and I think that's where offshoring becomes an option for many companies.”

Outsourced consultancy and IT talent will grow to implement new technologies. Beyond the dire need for higher skilled, more tech-savvy workers in the office, automation, digital transformation and data analytics are key priorities for company leaders today. But with it comes the need to attract more skilled workers who are adept at extracting the value from these newly implemented technologies. After all, a computer can’t have a meaningful conversation with a customer to solve a delivery issue.

The industry is seeing an increase in the hiring of consultancy firms to guide strategy, implementation and deployment of these technologies. Additionally, due to the serious lack of IT development talent in the U.S., such engagements often include drawing on outsourced IT talent, particularly for customizing and onboarding platforms.

Companies will increasingly adopt advanced technologies for employee training. Artificial intelligence is among the fastest-growing data-driven technologies transforming business. According to a NewVantage report, nine out of 10 businesses have ongoing investments in AI. 

One business area that has seen process optimization is employee training and development. AI is crucial in any organization’s hiring, onboarding and professional development process. According to a Gartner report, 20% of business content (including training content) will be written by AI by 2025. 

More companies are looking at microtraining technologies, which generate significant efficiencies and reduce overall onboarding times, allowing employees to start their work tasks sooner. For busy companies, it can be hard finding time for additional training and upskilling. With its low cost and proven effectiveness, microtraining can help employees boost productivity and stay engaged in their roles.

The logistics and transportation industries have always evolved, and 2023 will be no different as we move into an uncertain economy and the threat of recession. The goals remain the same: resilience, efficiency, reliability, speed and quality. COVID-19 tested our industry, forcing the adoption of new technologies and business models. But no matter what you hope to achieve, it takes talented people to get there. Building the right teams is mission-critical to reaching your 2023 goals. 

Robert Cadena is co-founder and chief executive officer of Lean Solutions Group.