By: admin August 08, 2023

Expert 10 Tips for Navigating the Freight Downturn

“I never predict freight rates, nobody can do that.” Soren Skou

We often name the delivery of goods from the point of origin to the point of consumption as the process of supply chain management, which is completely fine but it is a larger process as a whole. One of the essential stages of this process that involves the shipment of goods is known as freight forwarding. It is the delivery of goods from one place to another through multiple freights; the route adapted can vary from air to ocean and from rail to road. Logistics companies often face freight forwarding problems and other fluctuations that result in the downturn of freight.

What is freight market recession?

A large and prolonged collapse in the shipping or freight markets could be defined as a shipping industry downturn. The demand for the transportation of goods and commodities may noticeably decline during such a recession, resulting in lower shipping volumes and freight rates. After a prosperous period for the shipping sector, the past year has seen a gradual decline in freight rates as congestion subsided and global economic growth slowed.

2023 did not start off with much confidence for shipping companies and so far we can see freight rates dropping. Early in 2023, prices continued to decline as a result of production disruptions for certain commodities.

The common causes of freight slow down

The reasons for freight rates dropping at the begging of 2023 have been found to be bad weather and the seasonal Chinese year slow down. However; some of the common factors that cause the freight recession are:

Economic downturn:

During economic downturns, businesses and consumers tend to cut back on shipping non-essential items, leading to decreased freight volumes.

Trade tensions and protectionist measures

International trade disputes and the imposition of trade barriers can disrupt global supply chains resulting in the reduced movement of goods between countries.

Oversupply of shipping capacity

An excess of shipping vessels or other transportation assets can lead to intense competition among carriers, resulting in freight rates dropping and reduced profitability.

A decline in commodity prices

The movement of many raw materials and commodities significantly impacts the freight industry.

Global events

Major events like natural disasters, geopolitical conflicts, and health crises can disrupt supply chains and hinder the movement of goods, causing a freight recession.

Changes in consumer behavior

Shifts in consumer preferences can impact the types of goods being transported and the frequency of shipments resulting in the freight slow down or downturn.

Fuel price fluctuations:

As fuel costs account for a significant portion of transportation expenses, fluctuations in oil prices can affect freight rates and impact the demand for shipping services.

Government regulations

Changes in transportation policies can impact the freight industry's operations and costs, potentially affecting demand and supply.

10 Tips for Navigating the Freight Downturn

The freight industry keeps going through freight forwarder recession or fluctuations. So; in order to be prepared; it is the duty of the supply chain management services company or the associated agents to navigate these fluctuations successfully. Some of the tips given by the experts in this regard include:

  1. Diversify your client base

Your business may be more susceptible to a collapse if it depends too heavily on a small number of important customers. Spreading the risk and ensuring a consistent stream of income can be achieved by diversifying your clientele across different sectors and regions. Spend money on marketing initiatives to draw in new clients and cultivate enduring relationships with current ones to create a solid base for your company.

  1. Strengthen your relationship with existing customers:

While growing your client base is critical, it is just as important to keep your current clients. Businesses may decrease shipping volumes and some may even lower logistics costs during a decline in freight forwarder services. To keep your customers, concentrate on;

  • Offering them excellent customer service.
  • Affordable prices.
  • Trustworthy solutions.
  1. Optimize operations and efficiency:

A decline in freight requires a careful examination of your operational procedures. Find places where you can reduce spending without sacrificing service quality. To simplify logistics;

  • Decrease manual errors.
  • Boost overall effectiveness.
  • Use technology and automation.
  • Determine any potential bottlenecks and make fixes to streamline operations.
  1. Adjust pricing strategies:

A crucial component of surviving a decline in goods is pricing. While providing cheap air freight can seem like an obvious solution, it might not always be the wisest course of action. In difficult times, maintaining profitability while providing competitive rates can help draw in and keep consumers. Carefully evaluate your pricing strategies by making adjustments based on:

  • Cost.
  • Market.
  • Condition.
  • Competition.
  • Focus on cash flow management:

  • During a decline in merchandise, cash flow management becomes crucial. Analyze your cash flow patterns and take the initiative to keep your finances in good shape. So,

    • Improve your supplier agreements.
    • Control inventory levels effectively.
    • Keep a tight eye on your accounts receivables to guarantee that customers pay you on time.
    • Having a sizeable cash reserve might act as a safety net when times are tough.
    1. Focus on cash flow management:

    During a decline in merchandise, cash flow management becomes crucial. Analyze your cash flow patterns and take the initiative to keep your finances in good shape. So,

    • Improve your supplier agreements.
    • Control inventory levels effectively.
    • Keep a tight eye on your accounts receivables to guarantee that customers pay you on time.
    • Having a sizeable cash reserve might act as a safety net when times are tough.
    1. Innovate and diversify services:

    The ability of goods companies to resist economic crises increases with their adoption of innovation and service diversification. Think about extending your services to include value-added options. These alternative revenue sources can help counteract the effects of falling freight volumes and give businesses a competitive edge.

    1. Stay updated about the market:

    Making informed decisions requires being current on market trends and business changes. Keep updated of;

    • Economic trends.
    • Geopolitical developments.
    • Technology innovations.

    You will be able to respond proactively to problems and seize untapped possibilities by being adaptive to shifting market conditions.

    1. Invest in talent development:

    During a downturn in freight, a trained and motivated team can make a big difference in your company's success. To improve your freight forwarding agent’s skills invest in talent development programs. Employees that are engaged and knowledgeable are more likely to;

    • Innovate
    • Boost customer happiness.
    • Support cost-cutting initiatives.
    1. Collaborate with partners & competitors:

    Creating strategic alliances and working with rivals might be helpful in difficult times. Mutually advantageous outcomes can result from;

    • Merging knowledge.
    • Splitting costs.
    • Pooling resources.

    Examine the potential for joint ventures or collaborative projects that could expand your market reach and improve your competitive position.

    1. Keep your long-term goals in mind:

    Even though a slowdown in the freight industry might be difficult, it is crucial to keep your company's long-term goals in mind. Do not make decisions exclusively on short-term pressures as these may not be in line with the long-term objectives of your firm. Instead, concentrate on creating a company that is; 

    • Robust
    • Flexible.
    • Customer-centric.

    This way, it will be able to withstand the storm and come out stronger when the market recovers.


    The freight market is a diverse market that keeps seeing fluctuations. So; companies must be always prepared to cope with these fluctuations, especially when it is a time of fright downturn. Some experts have given tips on ways to navigate the recession phase of the freight market. Hopefully; it would be of help for the readers.

    Frequently Asked Question

    There are different ways to navigate the freight downturn, some of those being:

    • Strategic planning.
    • Adaptability
    • Decision making.
    • Diversification of clients.
    • Optimizing operations.
    • Innovation
    • Collaboration, etc.

    During a freight downturn; companies can reduce costs by using more efficient routes, negotiating better freight arte carriers, implementing advanced technology that improves the overall efficiency of the operations, and forming partnerships.

    There is no fixed duration when it comes to freight downturn as it may last from several months to a few years depending upon multiple factors.

    Industries that heavily rely on transportation and logistics are typically most affected by freight downturns. These industries include;

    • Manufacturing.
    • Automotive.
    • Retail.
    • Consumer goods.
    • Construction.