Every year the ‘busy season’ for container shipping runs from July through October as the USA imports increase to supply retailers for their yearend needs. Many transportation companies and 3PL’s estimate their yearly projections using the July through October uptick in business as an injection of year saving revenue. This year however the ingredients are coming together for a disappointing ‘busy season’.
Transportation is flat but warehouse space is full and at a premium. This means retailers and suppliers didn’t sell what they bought last year. Lethargic consumer spending has not been near enough to drain down the inventories. West coast port congestion helped the inventory buildup last year impeding inventory from getting to the shelves early for people to buy. Consumers not spending kept what did make it early from flying off the shelves.
There may also be an impact to shipping habits thanks to the labor disputes on the west coast as well as the new SOLAS requirement coming July 1st. The few US importers who are importing this season saw plenty of inventory not make it past bogged down west coast port systems in time to make the holiday buying season. They also know SOLAS will be in an effect and could be impact freight flow. These importers could choose to have goods shipped early to ensure the inventory is here when they need it. That early buying would spread what imports there are over a longer time period. The first and maybe second quarters may appear a little brighter but at the same time may make busy season feel and look even more pathetic.
If it happens it’s hard to say if this will be a part of a continuing trend. It could represent a lengthier overall slowdown for the Asia to USA trade lane as the face of import and export may be changing. Plenty of USA importers have found sourcing a little more friendly right here in the USA since the recession and near sourcing to Mexico and Latin America is growing in popularity. Ironically a maturing economy and a growing consumer base in China as the result of heavy exporting is the very thing that may keep their exports from growing in the future. China’s success in exporting is sabotaging its ability to keep prices low.
Although for now it appears a flat economy, some early shipping, and bulging inventories, are coming together to create more pain for the last two quarters for the ocean carriers and those of us who get byproduct business from international ocean shipping. If a shipment does not move ocean or air I can’t insure it, the local dray truck can’t haul it, and the line haul truck or rail can’t take it to the distribution warehouse or end destination. With that in mind, when you see someone walking through the department store with a loaded up shopping cart, thank them for helping the shipping industry and the economy in general. Right about now we could use a little help with our busy season.