2023 Predictions from the Pros

At the end of each year, Schematic Ventures asks founders of supply chain & manufacturing technology companies in the portfolio to share their thoughts on where they see the industrial markets heading over the next twelve months.

With top executives, entrepreneurs and operators touching every aspect of supply chain, the Schematic Ventures "Predictions from the Pros" is your guidebook to navigating the unpredictable year ahead.

Nick Bulcao - CEO, Airspace and Alex Coates - President & CFO, Airspace

The coming year will bring continued reshoring and partner changing of critical industries with American manufacturing partnerships moving from China and Europe to other regions, including US, Mexico, and South Asia. Automotive manufacturers will pull back on their logistics spend as used car market prices decline, impacting demand for new vehicles. The line between TMSs and visibility platforms will blur as those parties begin partnering or merging, and the next day consumer delivery boom will wane as the rising costs of capital impact fundraising for businesses with unproven unit economics.

Logistics leaders (shippers) across the board will be looking to cut spending throughout the entire supply chain to weather the storm as we enter a recession at some point in 2023.

 Chris Condon - CEO, Aircon AI

Global economic and cultural upheavals, conflict, sky-high energy prices, and a focus on a better future mark the end of the Covid-19 era and a close to 2022. Fairytale profits from reduced capacity and an increase in consumer demand is at an end as the global economy wallows between waves of excess inventory, factory shutdowns, and pent-up travel demand. The increase in air travel will combine with the latest freighter boom to generate sustainable capacity and stabilize pricing for air cargo.

The first half of 2023 will be a balancing act that should indicate just how bad the pricing rebound will be. The wild card is consumer behavior as that will determine just how deep this recession will get. The second half of the year will be more consistent as supply chains recalibrate and become efficient again.

Charter agreements are already dropping fast as passenger widebody flights resume across the globe and more economical passenger capacity increases. The glut of new and converted freighter capacity coming online this year will need to be managed to keep the market in balance.

Robert Garrison - CEO, Mercado Labs

What goes up.... After two years of record growth and profits, 2023 will be the opposite. In order to cope, companies will look to accelerate the digitization of their operations for greater efficiency and transparency. For importers, the supply side of their supply chain will be particularly vulnerable. Economics and global events are 'conspiring' in a way that will continue to test supply chains. This includes a protracted war in Europe and a new tax on imports there, as well as geopolitical tensions, particularly with China. With inflation still high and interest rates climbing, we are likely to see an economic downturn.

Abtin Hamidi - CEO, Torch

2023 is shaping up to be a year of disruptions and unpredictability, with potential changes in consumer purchasing habits, delays caused by environmental factors, and service providers adopting new technologies. Existing supply chains are prone to disruptions, and the growing frequency of major storms at sea and on land will exacerbate these issues. In addition to direct delays and cancellations, outdated technology and inefficient processes will hamper efforts to quickly recover.

Established logistics service providers that adjusted in response to the pandemic will face strong competition from smaller, agile data-driven companies as market conditions continue to fluctuate. Those with high-performing teams will benefit by returning to full-time office work and using real-time data and insights to improve profitability.

This entire message may or may not have been generated by Chat GPT :)

Sunny Han – CEO, Fulcrum

At least one more reverberation of the bullwhip effect will take place this year, causing unexpected supply chain shocks as networks readjust. Product companies with pressure to meet revenue and earnings growth targets will push harder on manufacturers, spending more time on finding alternate vendors to make sure earnings aren't missed due to a lack of supply. Downward pricing pressure will squeeze customers in the middle of the supply chain. Private equity offers will continue to soften as interest rates go up and stay up, changing the exits for small and medium sized companies.

John Henry Harris – CEO, Harbinger Motors

The venture ecosystem continues to be turned inside out, with capital deployment resuming in fits and starts alongside a much higher startup mortality rate.

More startups will fail in 2023 than any year since 2001.

Michael Morris - CEO, ONRAMP

With diesel supply constraints showing no signs of easing, smaller fleets will move to cost-based fuel pricing in order to remain competitive with larger firms. Persistently high diesel prices will also lead to more card skimming and fraud on the legacy payment networks, necessitating better technology to mitigate losses. Enterprise fleets and merchants will have strong incentives to work together to keep costs under control. The increased adoption of alternative fuels will create a variety of new payment challenges that can only be addressed via digital solutions.

Matt Motsick – CEO, Rippey AI

2023 will be about LLMs (Large Language Models) and Chatbots, but more specifically, how companies will be able to provide customers with immediate responses. By combining the LLMs with AI and enabling the chatbot to reply without human intervention, companies will be more scalable in providing real time results for the customer.

Erik Nieves - CEO, Plus One Robotics

 It’s 2023 and the notion of the lights-out warehouse is dead.

The market has now realized that the only path forward to achieve automation at scale is to have a human-in-the-loop. Keeping humans in the loop – even if they are located remotely – has proven the best way to manage exceptions in real time. Warehouse operators that adopt this approach will gain the benefits of reliable throughput and better accuracy out the door.

Anshu Prasad - CEO, LeafLogistics

In a year when everyone will be under pressure to do more with less, there will be additional scrutiny on actual results. It won’t be good enough to claim to be outperforming peers, beating budget or outpacing backward-looking benchmarks using directional data. Shippers and providers will need to deliver real results, driving EBIT, cash and profitability impacts. Supply chain practitioners will need to show what they've done differently to prevent a recurrence of the pain they've endured over the past couple of years. Doing more of the same but expecting a different outcome will not be acceptable.

Chris Richter - CEO, FloorFound

With the macro environment driving all companies to focus on efficient and profitable revenue, the ability for brands to continue to absorb major losses from returns and kick the can down the road will end. Return rates will continue to rival sales rates for many retailers, exacerbating the existing inventory glut and making liquidation more challenging.

Put simply, retailers will need to do more with less.

At the same time, consumers will continue to lean in on sustainability and more affordable resale options. Retailers will be pressured into finding new and better solutions for maximizing revenue recovery on returns and resale while also finding ways to sustain sales growth rates.

Andrew Smith – CEO, Outrider

Surging demand and capacity shortages drove rapid increases in investment in supply chain automation over the last few years. In 2023, demand for autonomous systems will continue to remain high as logistics dependent companies are eager for autonomy to deliver immediate bottom line cost savings. Wage growth for engineers working on autonomous systems will stabilize as more talent comes into the market from underfunded technology companies. Sales of electric vehicles for distribution yards ("yard trucks") will continue to see high double digit increases with growing industry-wide recognition that modern distribution operations will be both autonomous and electric.

Evan Smith - CEO, Altana

In 2023, global supply chains will be shaped - and broken - by the continued resurgence of industrial policy and geopolitical competition. Strategic supply chains like food, energy, pharmaceuticals, semiconductors, and telecommunications will localize and regionalize according to geopolitical fault lines. Businesses will scramble to illuminate their upstream, multi-tier supply chain networks in order to comply with a global panoply of supply chain regulations. Logistics providers will seek to automate otherwise manual compliance processes in order to address the explosion of compliance demands in a recessionary environment.

Ann Xu - CEO, ElectroTempo

2023 is the year when vehicle electrification in the supply chain industry transitions from a question of whether to a question of how.

In the US, strong federal incentives and stringent California mandates for electric vehicles were put in place in 2022. Outside the US, the global energy crisis that was sharply exacerbated by Russia's invasion of Ukraine has painfully reminded the world of the perils of fossil fuel dependence. Jointly, these forces will lead to implementation efforts throughout the supply chain industry. As such, companies' considerations will expand from vehicles to charging infrastructure and from pilot to scale.

Oren Zaslansky - CEO, Flock Freight

While interest rates continued to rise, impending rail strikes loomed, and Russia’s impact on fuel costs took its toll, we saw unprecedented volatility across the global supply chain last year. In 2023, sectors across the supply chain will continue to face the economic ripple effects from those events. Normalizing interest rates will accompany a dip in consumer spending, meaning more unpredictability in the overall demand for goods. In freight trucking, shippers will attempt to secure contracted rates while prices are predictably lower early in the year so carriers should focus on earning more on every load and backhaul.

Integrating smarter solutions, such as shared truckload technology, into freight operations will help make the most of every shipment and square foot of trailer capacity. With businesses finding new ways to integrate technology into their logistics strategy, the most flexible choice will likely also be the most environmentally sustainable solution.

Prior Predictions

• 2022 Predictions from the Pros
• 2021 Predictions from the Pros
• 2020 Predictions from the Pros
• 2019 Predictions from the Pros