Peak Season: Not What it Used to Be

Busy_Road

Many experts in the transportation industry expect this year’s peak season to be suppressed.  While there will likely be an increased amount of shipping activity and e-commerce demand, it will not be like years past.

FTR Senior Analyst, Larry Gross, pointed to high inventory-to-sales ratio amongst shippers as one of the hindering factors in this year’s peak season.  He says as our roadways and infrastructure become less reliable and slower, shippers need to carry more inventory than usual.

Since shippers will carry more inventory, and move it more slowly, and sell less of it, there will be far less overall shipping activity.  Slow moving inventory could even lead to cancellations for ocean vessel voyages.

Labor uncertainty in the nation’s West Coast ports adds to the bleak prospects of this year’s peak season.  While port labor issues are not as big of a factor as they were last year, many aren’t sure what to expect from the West Coast ports and are hoping that the slight uptick in shipment volume won’t cause problems like there have been in the past.

Paul Bingham, Vice President at EDR Group, is not expecting a strong 2015 peak season either.  He explained that weakness with some major trade partner economies like Japan, China and Southern Europe, as well as the strengthening of U.S. dollar exchange rates, will only lead to moderate growth in demand for imports.

He went on to say, “European and Asian economic growth in 2015 is not drawing in many more U.S. exports as those economies are mostly weak.  U.S. manufactured goods import demand should be helped by relatively low oil prices allowing consumers to potentially spend more on other goods (and services) including more imports.  However, the recent weakness in retail sales still reveals consumers who lack confidence in their financial and employment situations even as those continue to improve for most families in the continued U.S. economic recovery.”

There are a number of factors that affect current peak season forecasts, however, it is clear that there will be small to moderate gains in overall shipping activity.

Do you have experience shipping during peak season?  Do you have a plan to move inventory quickly in the coming months?  Leave us a comment and let us know.

Keep Reading: