Insights Into 2024: Your End-to-End Supply Chain Outlook

While there are no guarantees with today's supply chains, we've taken a look at this year's trends and their potential impact for shippers in 2024. The landscape of supply chains remains influenced by dynamic factors like evolving customs regulations, geopolitical trends, innovation and shifts in freight demand and capacity. Conversations in the trade landscape continue to revolve around changing trade flows and new sourcing strategies, with an increased focus on Nearshoring. Overall, market indicators are signaling a more stable outlook for freight forwarding in the new year, as shown in somewhat flat forecasts for both air and ocean freight rates, continuing from their 2023 trend.

Outlined below are detailed forecasts anticipated to come into play in 2024, categorized by mode or service. For more on what you can expect next year, check out our recent webinar, 2024 End-to-End Supply Chain Outlook.

UPS Supply Chain Solutions is your company’s end-to-end solution provider. Reach out to one of our experts if you have any questions about optimizing your business’ supply chain.

In 2024, oil is expected to play a big part in North American air freight. The ongoing conflicts in the Middle East and Ukraine could threaten to send oil prices higher and increase expenditures. The export of oil from the Middle East, coupled with higher inflation in the US, has the potential to impact the US economy, given that the export of oil serves as a binding factor between the two regions’ economies.

When looking at long-run Consumer Index reports, expected business conditions show minor changes. This indicates that consumers believe the current worsening in economic conditions will not press forward much longer. As consumers spend more money this year, we could see inventories start to diminish next year, and as companies begin to explore nearshoring solutions in countries like Mexico, there could be an increase in North American air freight demand and volume in 2024.

Global macroeconomic projections show a mixed outlook in 2024. Projections indicate a lower GDP growth compared to 2023, with a gradual rebound in the second half of 2024 following a slower start. Conversely, real exports, are expected to grow significantly from a slower pace in 2023, as markets and manufacturing continue to recover globally.¹ Global capacity has fully recovered above 2019 levels and could show a slight contraction over the first half of 2024 but should remain relatively flat. Air cargo demand should see a strong recovery from a difficult year in 2023, with Accenture Cargo projecting 4.7% year over year growth in 2024, not reaching 2022 levels of demand but showing stronger growth in some of the heavily impacted transpacific lanes in addition to strong growth on intra-APAC shipping.² The recovery of global demand and flatter capacity growth should keep market rates relatively flat. Rates will likely remain low for the first nine months of 2024, with a potential for growth and a return to true peak shipping season in Q4. However, ongoing global disruptions, such as the Israel-Hamas and Ukraine conflicts, could create volatility to oil prices, and, in turn market rates, as the year progresses.

Need help with moving your business using air freight? If you have questions, reach out to one of our Air Freight Experts.

2024 is set to be a record-breaking year again with an estimated 3 million TEUs of new capacity entering the market. This combination of excessive available capacity and low demand are pointing to an extreme overcapacity in the market. Drewry Supply/Demand Index forecast for 2024 is 74.3, the lowest Drewry Supply/Demand Score ever reported. For reference 100 is the benchmark for “Market Equilibrium”. Anything below 100 represents that supply is outpacing demand. This Supply/Demand environment will likely lead to very low-rate levels, an increase in carrier capacity management via blank sailings, slow steaming, adjusting sailing string availability and frequency, among other things, to try and buoy rates at a level that allows the carriers to remain profitable.³

To get assistance with your 2024 business plan, reach out to one of our Ocean Freight Experts.

As we look in to 2024, we can expect US Customs and Border Protection (CBP) to continue further enforcement of the Uyghur Forced Labor Prevention Act (UFLPA) for US imports. This expectation stems from the US government’s recent statement that China does not appear willing to change their policies to reduce forced labor. Consequently, responsibility falls on US importers to ensure no forced labor is used anywhere in their supply chain, all the way back to raw materials, and including financial institutions. CBP will continue to develop and refine the tools they use to enforce UFLPA.⁴

In addition, various Partner Government Agencies (PGAs) are expected to require new data elements in the new year. For some PGAs, such as the USDA’s 'Lacey Act', new commodities will be included in existing reporting requirements. In other cases, PGAs like the Consumer Product Safety Commission (CPSC), USDA National Organics Program (NOP), and Fish & Wildlife Service (FWS), data submission via ACE (Automated Commercial Environment) will be required.

And finally, we anticipate the review of certain trade programs, encompassing a potential new process to secure Section 301 exclusions by the United States Trade Representative (USTR) and a renewed assessment of General System of Preferences (GSP) by Congress.

You need a Customs Broker who understands the complexities of your business, reach out to one of our Customs Brokerage Experts to get started.

As previously mentioned, companies are currently taking proactive measures to safeguard their operations by diversifying the locations where they manufacture their goods, and we anticipate this trend persisting into 2024. This strategic shift aims to reduce their vulnerability to potential disruptions in the supply chain.⁵ Particularly noteworthy is the increasing popularity, especially among U.S.-based companies, of nearshoring in Mexico in 2024. This is underscored by a significant 5.8% surge in foreign direct investment in the country in May, rendering Mexico an appealing destination for manufacturing.⁶ These developments reflect a broader effort within the business world to adapt and thrive in an environment marked by geopolitical volatility and supply chain unpredictability.

If you have any questions about global logistics or nearshoring solutions, reach out to one of our Global Logistics and Distribution Experts.

In summary, we expect 2024 to be a stable year that will allow companies the ability to grow. UPS Supply Chain Solutions can offer your company an end-to-end supply chain solution from air and ocean freight shipping, Customs Brokerage expertise and warehousing and nearshoring solutions.

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1. "IHS-Markit: October 2023." IHS-Markit.
2. "Accenture Cargo." 2023.
3. "Drewry’s Q3 Container Forecaster Report." Drewry. October 2023.
4. "Forced labor." Customs and Border Protection. 2023. https://www.cbp.gov/trade/forced-labor
5. "The Supply Chain Trends Shaking Up 2023." KPMG. 2023. https://kpmg.com/xx/en/home/insights/2022/12/the-supply-chain-trends-shaking-up-2023.html
6. "Nearshoring in Mexico." Deloitte. July 2023. https://www2.deloitte.com/us/en/insights/economy/issues-by-the-numbers/advantages-of-nearshoring-mexico.html

This document is for informational purposes only. It does not constitute legal advice. Information herein was obtained from government, industry, and other public sources. It has not been independently verified by UPS and is subject to change. Recipient has sole responsibility for determining the usability of any information provided herein. Before recipient acts on the information, recipient should seek professional advice regarding its applicability to the recipient's specific circumstances.