ERA’s quarterly insights regarding market conditions, potential impacts on procurement, and supply chain planning.

General Supply Chain Observations & Updates

The risk of recession is still high (most likely in the first half of 2023), and economic growth is expected to be flat for 2023. Global supply chain disruptions continue to be a factor, but many sectors are beginning to catch up on inventory, and prices in several commodity areas are beginning to decline. The U.S. Dollar has weakened by about 11% since its peak last September; however, it is still stronger than pre-pandemic levels. A weakening dollar increases the cost of imports but decreases the cost of exports.

Supply Chain & Freight

The truckload index declined in Q4, showing the first negative YoY change since Q3 2020. The LTL freight index is expected to continue declining, falling from 55.3% in Q3 2022 to 48.6% in Q4. Going forward, shippers should continue to seek ways to reduce costs, with a moderately high fuel surcharge expected to remain and LTL General Rate Increases (GRI) coming soon.

The express parcel index declined in both Q3 and Q4, coming down from the Q2 2022 peak, while the ground parcel index hit a record high in Q4.

From Cowen/AFS Freight index, FedEx announced the highest-ever netlist rate increase, effective January 2023, for ground and express parcels, and a UPS announcement will follow soon. However, that published average can be misleading. The actual list rate increase varies based on package characteristics, as do increases in individual surcharges, which can drive the realized increase significantly higher than the announced GRI. Furthermore, annual GRIs have a compounding effect, with shipping costs that can go up over 30% in just five years.

Ocean shipping rates have dipped below pre-pandemic levels. In the U.S., most retailers have ample inventory. Railroads averted a labor strike, and package delivery trucks have plenty of spare capacity. Now fully stocked, or in some cases stuck with excess inventory, retailers have more leverage in price negotiations with manufacturers, resisting price increases and asking suppliers to provide discounts.

To summarize, suppliers have become much more receptive to inquiries about new and current business. With supply constraints loosening, suppliers are more open to competing for business than at any time over the past three years.

KEY TAKEAWAY: As the economy stagnates amid a potential recession, now is a good time to push back on suppliers for price concessions and ask what they can do to help you lower costs or operate more efficiently. For most commodities, the timing for creating competitive bid situations is better than it has been at any point over the past three years.


Lumber has crashed, and prices are below their early 2020 pre-Covid levels. Rising interest rates are mostly to blame, as new housing starts and real estate development are slowing across the U.S.

Looking forward, lumber is estimated to trade in the upper $200s per 1,000 board feet by the end of the year.

Price declines are expected to be somewhat offset by lower-than-normal supply levels throughout the sector, as forest fires and surging operating costs at mills force suppliers to cut their production levels. Two large lumber mills, Interfor and Canfor, have announced large production cuts, as these companies have been unable to turn profits when operating at full capacity due to unusually low demand.

KEY TAKEAWAYS: Now is a good time to ask suppliers for an honest assessment of their supply. Coming out of the retail season, most areas of the country are seeing more supply availability, which should lead to price decreases or bid activity opportunities.

Chemicals & Gases

U.S. chemical production growth has slowed in recent months with a deceleration in end-use markets and headwinds for U.S. exports from a higher dollar and lower global growth.

In 2023, chemical output is expected to decline.

As in many other supply chains, chemical manufacturers’ inventories were rebuilt during the year, as many companies increased inventories of raw materials and products due to supply-chain constraints. As demand started to ease during Q3 2022, chemical inventories were high relative to shipments moving into the end of the year.

KEY TAKEAWAY: Continue to communicate with your suppliers regarding lead times while holding them accountable for the market decreases and corresponding reduction in your prices.


North American resin producers are already looking to start 2023 with higher prices for both Polyethylene and Polypropylene. Producers have worked diligently throughout Q4 2022 and into Q1 2023 to reduce the supply overhang through aggressive exports, price discounts, and reduced operating rates.

KEY TAKEAWAY: Plastic prices are decreasing, so take this opportunity to begin supplier negotiations and bring your prices back to Earth.


Higher stockpiled raw materials and a limited downstream demand should cause Stainless Steel HR Coil prices to remain stable throughout the coming weeks, according to Chem Analysts News.

A rise in finished inventory readily available in the U.S. market has caused downstream demand for Stainless Steel HR Coil at most manufacturers to be weak for the first quarter of 2023. This trend could continue into the second quarter of 2023.

Cleveland-Cliffs announced an increase to base sheet steel prices by $50/T (6.25%) minimum on all carbon flat-rolled products in mid-Jan’23. This price hike is due to increases seen in both pricing and volume for the automotive steel business, reducing the material available to be sold on a spot basis.

KEY TAKEAWAY: In general, metal prices are coming down; specifically, steel has seen steady declines for the past few quarters. If your suppliers have not passed along price decreases, you are paying more than you should, and it is past time to pressure them for lower prices.


Consumer demand and output for corrugated boxes, as well as other packaging material, fell sharply in Q4 2022. U.S. corrugated operating rates fell to 80.9%, according to the Fibre Box Association, its lowest level since Q1 2009. U.S. box shipments also fell by 8.4% in the Q4 2022.

Prices for kraft linerboard (the material that makes up shipping boxes) declined in January for the third straight month (5.3% combined decrease). The price decline in November was the first-time containerboard decreased in price since the summer of 2019, and two other decreases were announced in December and January. Easing demand, plenty of inventory, and new production capacity have forced box makers to cut back on output to balance the market.

KEY TAKEAWAY: Like steel, if your suppliers have not passed along price decreases, you are paying more than you should, and it is past time to pressure them for lower prices.

About the Authors

Travis Cantrell and Patrick Garr are Manufacturing Specialists with Expense Reduction Analysts. They both hold engineering degrees and have over 24 years of collective experience studying complicated client expenditures in Direct Material, Industrial Chemicals/Gases, Packaging Suppliers, and Factory Consumables/MRO. ERA utilizes its in-depth subject-matter expertise to negotiate with suppliers and deliver best-in-class sourcing solutions for their clients.

ERA Manufacturing Specialists – Packaging, Factory Consumables, Chemicals/Industrial Gases, Direct Material