Shipping Peak Season Report

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It seems that capacity problems and container shortages have begun to disappear. Shipping companies have been steadily increasing container inventory for the past few months. Capacity problems are almost nonexistent for ocean shippers and railroad increases are being handled well by rail transport.

Volumes increased early this year because retailers were afraid that their shipments would not come in on time. Delays, capacity problems, and container shortages had been affecting delivery times for months. So, a lot of big retail ordered early in hopes of being able to effectively maintain and manage their inventories.

Experts were afraid that the summer months peak would simply come early and things would slow down after the initial rush. However, it seems that the volumes have held steady, much longer than anyone expected. The major ports have reported that their volumes have been around 25% heavier than last year and they’re pretty solidly booked for the next couple of months.

The early summer spike in shipping was followed by a long plateau, and now is expected to slow down again. Asian exports have slowed down, which generally means that we’ll see it here before long. Ocean freight companies have started to pull out the extra ships that they were using for the busy season and some are reporting that they have more room on their vessels.

The retail industry is still tight on inventory. They aren’t really stocking up, but simply meeting demand. This tightness affects the ocean freight industry. No one expects that to change until economic recovery is in full swing, because retail sales are still moving up and down. Retailers don’t want to assume that everything is about to get better until they have some proof. Everything is still dependant on what happens with the economy, but for now, the long plateau is a welcome relief.

Some say that container volumes are not immediately affected by economic downturn, because it takes a long time to get goods from the manufacturer to the shelves. Retailers put in orders months before they need the goods. So, it could be that summer volumes were higher because orders were placed before anyone knew how bad the recession really was. In turn, it could be a while before volumes increase in response to higher demand.

Air freight volumes generally peak in the fall, but some airliners have already increased their projected earnings for the year. They’ve seen a dramatic increase over the summer and expect it to continue to increase through the holiday season. This is all good news for air, rail and ocean. Long plateaus of high volumes have been very welcome in the ocean shipping industry. Now that capacity issues and container shortages seem to be at bay, retailers can start to relax as well. Overall, shipping companies of all types are optimistic about recovery after receiving summer reports and witnessing an extended peak season.

LILLY + Associates

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