Key Takeaways
- A monthly survey from Tech.co has revealed a drop in freight demand that is hurting logistics professionals.
- This drop has led to external pressures becoming an even bigger problem for these companies.
- Our data suggests that businesses are therefore turning to methods such as workforce reduction in order to keep themselves afloat.
According to the latest research from Tech.co, a reduction in freight demand is putting pressures on logistics professionals.
The drop in demand is also exacerbating existing pressures for companies, such as increasing diesel prices.
As a result, logistics companies have shifted their money-saving strategies, increasingly turning towards reducing their workforce and employee hours.
Reduced Freight Demand is Hurting Logistics Professionals
During a time of year where it’s expected to be high, freight companies are experiencing reduced demand, according to the latest monthly findings from Tech.co.
In our survey, 17% of sector professionals reported experiencing “low freight demand” through both October and November.
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Other measurements, such as the Cass Freight Index, have reported similar numbers. Significantly, there has been a 7.8% decrease in the number of shipments compared to the previous year’s October.
Drop in Freight Worsening External Pressures
This shortage of demand has subsequently exacerbated the other financial pressures mounting on today’s logistics professionals.
This is indicated by our data, in which 20% of professionals claimed their key strategic priority was managing financial pressure, an 8% increase from September.
Diesel prices, for example, have risen in November, according to the US Energy Information Administration. This has caused it to become a significant budgetary constraint.
Logistics Businesses Take on More Extreme Survival Measures
As a result of this drop in demand, professionals are turning to more extreme measures to save costs, switching up the cash-flow improvement strategy that we’ve seen over the past few months.
Since September, businesses looking to manage their financial situation by reducing employee headcount has risen sharply by 15%. Likewise, those reducing employee hours for the same reason has increased by 13%.
In turn, companies are moving away from methods such as financing or restructuring debt, as this decreased by 13% since September. As freight struggles continue, it seems to be becoming more apparent to companies that new methods of survival might be necessary.
