Freight companies expect “muted peak season” due to waning retailer demand

11/03/2022 / By Belle Carter

Freight companies are now preparing for what executives are calling a “muted peak season” as diminishing shipping demand from overstocked retailers ripples across the country’s shipping markets.

According to the Wall Street Journal (WSJ), the changes are cascading across freight operations, cutting into inbound shipping volumes and bringing fewer goods onto the roads.

“The fourth quarter is generally the peak of the holiday shipping season,” the chief executive of Chicago-based trucking and rail freight services provider Hub Group Inc. David Yeager said in an earnings conference call in October. “However, judging by the feedback from our clients, this peak will be muted versus historic norms. Beyond 2022, we do acknowledge the potential for a continued softening economy.

As per trucking executives, the biggest impact so far has been on spot-market business, where one measure shows rates falling from August to September for the first time since 2015. (Related: Shipping cost from Asia to US West Coast drops 84% year-over-year as consumer demand plunges.)

WSJ further reported that larger carriers that depend more on long-term contract business are more insulated. But the weakness in spot demand is filtering into the bigger contract market.

Trucking executives expect demand to pick up as those excess inventories are sold off. They are hoping that retailers start shipping in bigger volumes again once they clear out their excess inventories, although that may not come until early next year.

“It’s just a matter of the demand we feel like is not out there for our customers’ products, if you will,” said Adam Satterfield, chief financial officer at the Thomasville-based operator Old Dominion Freight Line Inc. “We’re just not picking up as much freight from those same customers that we may be making stops every day at their location.”

But he believes that at some point, “people have got to get some inventory back in the system.”

Southern California port truckers scramble for loads as supply chain congestion fades

Meanwhile, port truckers in Southern California are scrambling for loads as container imports decline. The traffic jam of container ships off the Southern California coast, which used to be the center of U.S. supply chain congestion during the Wuhan coronavirus (COVID-19) pandemic, has effectively disappeared.

According to the Marine Exchange of Southern California, the line of ships waiting to unload at the Los Angeles and Long Beach ports went down from a peak of 109 ships in January to four vessels in the third week of October.

The White House thinks it’s a positive sign.

“Clearly it is good given how much these supply-chain constraints were drivers of inflation last year,” said Sameera Fazili, deputy director of the National Economic Council and White House Task Force on supply-chain disruptions chief.

President Joe Biden and port administration officials determine a range of factors that have helped ease congestion, which includes a tighter queuing system that had ships lining up further out in the Pacific; new container yards that freed up space on docks; and government initiatives that fostered better collaboration between retailers, ports, railroads and truckers.

Port figures indicate that Los Angeles and Long Beach ports handled 686,133 loaded import containers in September, down by 18 percent from a year earlier and the lowest level since June 2020. Meanwhile, August imports flunked 12 percent from last year, which analysts consider a massive drop during the traditional peak shipping season.

Collapse.news has more news on the collapsing transportation and freight industries in the United States.

Watch this video about the skyrocketing gas prices that lead to high shipping costs.

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