What Kind of Peak Season Can We Expect This Year?

August 1, 2019


The traditional Peak Season is almost upon us – Increases in all transportation modal volumes. But, what kind of season can we expect? Trade journal, Logistics Management, recently conducted their annual survey of logistics professionals and found that 33.3% expected Peak Season to be more active than last year (down from 61% last year), 34.8% expected it to be less active (up from 10% last year), and 31.9% indicated they are not expecting a change (up from 29% last year).

The Port Tracker report issued by maritime consultancy Hackett Associates and the National Retail Federation look promising with July estimates of 1.93 million TEU for a 1.3% annual gain. August and September are forecasted at 1.96 million TEU and 1.89 million TEU, respectively, for gains of 1.3% and 3.4%.

By all accounts, it should be a positive peak season thanks to an economy that is humming along, low unemployment and healthy retail sales. But, yes, the Trade War continues and with it, a lot of anxiety and unknowns among shippers and logistics professionals alike. Pass on the additional costs of this war to customers or absorb it remains a question for many.

Meanwhile, warehouses across the country continue to remain tight thanks to front-loading ahead of tariff increase deadlines throughout last year and into this year. The latest data from the U.S. Census Bureau indicate a sales to inventory ratio of 1.39 for May, the second consecutive month for this ratio and above the 2018 ratio of 1.34. This ratio simply means that on average, in May 2019, it took 1.39 days to draw down inventory versus 1.34 days in May 2018.

Meanwhile, ocean freight data for June is mixed with Los Angeles and Long Beach, U.S. ports that often serve as the primary Asian freight entryways into the US, recorded total TEUs of 5.76% and a decline of 5.0% respectively. Looking into this data finds that loaded outbound TEUs declined for both ports while loaded inbound increased at the Port of Los Angeles 3.48% but declined 4.2% at the Port of Long Beach. However, despite the overall positive gains at the Port of Los Angeles, in particular, the number of empty containers the port handled in June is in question, up 18.97%. Are the containers being repositioned for future demand? Or is this a product of the Trade War with China? Regardless for the port as they are paid for handling all containers, empty, full or partial.

So what will the second of 2019 bring to the logistics and transportation markets? A strong peak season? We don’t think so. At best, we expected a muted one as inventory levels remain high and shippers remain cautious in this uncertain global trade environment.

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What Kind of Peak Season Can We Expect This Year?

August 1, 2019


The traditional Peak Season is almost upon us – Increases in all transportation modal volumes. But, what kind of season can we expect? Trade journal, Logistics Management, recently conducted their annual survey of logistics professionals and found that 33.3% expected Peak Season to be more active than last year (down from 61% last year), 34.8% expected it to be less active (up from 10% last year), and 31.9% indicated they are not expecting a change (up from 29% last year). The Port Tracker report issued by maritime consultancy Hackett Associates and the National Retail Federation look promising with July estimates of 1.93 million TEU for a 1.3% annual gain. August and September are forecasted at 1.96 million TEU and 1.89 million TEU, respectively, for gains of 1.3% and 3.4%. By all accounts, it should be a positive peak season thanks to an economy that is humming along, low unemployment and healthy retail sales. But, yes, the Trade War continues and with it, a lot of anxiety and unknowns among shippers and logistics professionals alike. Pass on the additional costs of this war to customers or absorb it remains a question for many. Meanwhile, warehouses across the country continue to remain tight thanks to front-loading ahead of tariff increase deadlines throughout last year and into this year. The latest data from the U.S. Census Bureau indicate a sales to inventory ratio of 1.39 for May, the second consecutive month for this ratio and above the 2018 ratio of 1.34. This ratio simply means that on average, in May 2019, it took 1.39 days to draw down inventory versus 1.34 days in May 2018. Meanwhile, ocean freight data for June is mixed with Los Angeles and Long Beach, U.S. ports that often serve as the primary Asian freight entryways into the US, recorded total TEUs of 5.76% and a decline of 5.0% respectively. Looking into this data finds that loaded outbound TEUs declined for both ports while loaded inbound increased at the Port of Los Angeles 3.48% but declined 4.2% at the Port of Long Beach. However, despite the overall positive gains at the Port of Los Angeles, in particular, the number of empty containers the port handled in June is in question, up 18.97%. Are the containers being repositioned for future demand? Or is this a product of the Trade War with China? Regardless for the port as they are paid for handling all containers, empty, full or partial. So what will the second of 2019 bring to the logistics and transportation markets? A strong peak season? We don’t think so. At best, we expected a muted one as inventory levels remain high and shippers remain cautious in this uncertain global trade environment.

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