2024 is shaping up to be a very different year than 2023.
In the rapidly evolving global economic landscape, 2023 has marked a pivotal shift towards deglobalization, reshoring, and the localization of manufacturing.
As we peer into 2024, with expectations of falling interest rates and a potential end to the freight recession, a fundamental change is underway in the manufacturing sector.
Deglobalization will accelerate, and reshoring and localization of manufacturing will continue
2023 has seen a severe freight recession, especially in North America, with significant overcapacity and declining rates for ocean shipping as well. Although interest rates are widely predicted to fall in 2024, and the freight recession may end, the multi-decade trend of moving manufacturing overseas, especially to China, may be largely over. North American companies are increasingly re-shoring manufacturing (primarily from China to Mexico, due to the strong US dollar) but some firms are moving back to Canada as well.
Increasingly even Chinese manufacturers are looking abroad, moving operations to Mexico and Vietnam, for example. Even though new manufacturing facilities tend to be highly automated, this still bodes well for a longer-term recovery of some manufacturing jobs in North America, especially Mexico and Canada, but also in the US. Even German firms are considering moving some or all of their manufacturing to the US if energy prices cannot be quickly restored to pre-Ukraine workable levels.
The economic rise of the BRICs will continue vs the West
Europe, then North America, has been the dominant economic force for hundreds of years. This is changing fast with the rapid rise of economic power by China, India, Brazil, Russia, the MENA region, and now Africa.
The primary market is increasingly Asia, not North America or Western Europe, and the primary economic growth in the coming years is expected to occur in China, India, SE Asia, and Africa, not in the “West”. This is fundamentally good in terms of the growing purchasing power of the average person in the world and presents a huge opportunity for creating vibrant, sustainable regional economies that are not dependent on Western aid, finance, or multinational corporations.
There is a huge opportunity for new regional businesses tailored to the cultures and environments where growth is predicted to be most rapid.
“Circular” economies will increasingly be recognized to work best at local/regional scales
There is growing interest in circular economies, where waste from one process is input to another, and products are designed to be returned to the manufacturer for 100% reuse or remanufacturing. To minimize energy consumption and maximize benefit to the local economy, this approach works best when regionalized. Circular economies will increasingly be sustainable, and local economies as well.
Demand for local and organic products will increase
Growing awareness of the key importance of diet in human health, and interest in locally produced and organic foods will drive quick growth in this sector. According to Export Development Canada, demand for organic foods is currently growing at 8% annually. Unable to keep up with demand, Canada is now importing 7 Billion dollars worth of organic foods per year. In response, Canadian farmers are steadily expanding their organic acreage as they find new opportunities in the burgeoning demand for organic foods. Local and regional transportation of organic and non-GMO foods is expected to be a growing sector in 2024.
“Sustainable” will increasingly be defined as stable, not requiring growth, and local/regional
Stability, not growth, is key to truly sustainable businesses. Local/regional production will be increasingly valued due to the freshness and quality of food products, and the benefits to the local/regional economy of spending the money close to home. It is also very difficult to have low or zero-emission production and manufacturing if the product must be shipped halfway around the world to a consumer, and then have the waste shipped back to distant countries for reuse.
High-interest rates for a longer period will reward capital-efficient, sustainable companies
While it is widely expected (but by no means guaranteed) that interest rates will start to decline in 2024, it is unlikely that venture private equity firms will return to the easy finance days when interest rates were near zero. As a result, logistics startups that are extremely capital-efficient and profitable are more likely to survive in 2024 and are likely to outperform their venture-funded peers with real sustainable growth based on market-tested, profitable systems.
Transition to zero-emission vehicles and renewable energy will accelerate, but for primarily cleaner air and sustainability, not climate concerns
There is a growing divide worldwide between those that believe we are in a climate emergency and those that do not. But the underlying value of transitioning to zero-emission vehicles powered by renewable energy remains. The short and long-term benefits to air quality and human health alone, coupled with energy efficiency, decentralization of power production, and potential longer-term reduction in transportation cost all support the continued transition away from fossil fuels, even if the climate models are wrong in the end. Regardless of the urgency, a transformation of transportation and energy sourcing this large cannot be accomplished overnight, and we need to keep people warm and well-fed and economies running well as we make the transition.
Eric Beckwitt is an internationally recognized author and speaker on emissions reduction from freight transport. He wrote “A Green Future for Freight” in the 2016 and 2018 G7 Summit editions of Climate Change: The New Economy (CCTNE). He was a speaker at COP22, the UN Climate Change Conference in Marrakesh, and authored new insights “Accelerating the Transition to Zero Emission Freight Shipping” in the COP26 (2021) issue of CCTNE. He is the creator of North America’s First Low Emission Freight Marketplace in cooperation with SmartWay and Natural Resources Canada.
Mr. Beckwitt and/or Freightera have been featured in Forbes, Fortune, Inc. Magazine, NBC, ABC, and Entrepreneur, among over 300 news sites worldwide. He is the recipient of over 18 grants and awards, including the 2016 BC Tech Technology Impact Award, 2019 Clean50 Award, 2020 Deloitte Technology Fast50, and 2022 Globe and Mail Report on Business Changemakers Award.