November 01, 2022
The Wall Street Journal in the space of 11 days, published two articles on the decline in freight demand reported by some of the largest long-haul freight companies in the United States. Trucking companies are kind of sounding the alarm as they have seen demand for their services drop somewhat at a time when they are normally busiest.
A room released on Saturday said lower demand has led to a slowdown in spot market volume, which could have a ripple effect on longer-term contracts that make up the bulk of activity.
“The fourth quarter is usually the peak of the holiday season. However, judging by feedback from our customers, this spike will be muted compared to historical norms,” David Yeager, CEO of trucking and freight rail services company Hub Group, told analysts on the third quarter of the society. earnings call Last week. “Beyond 2022, we recognize the potential for a continued slowdown in the economy, but we believe we are positioned for success as we have taken several important steps to improve our resilience in a bear market.”
Hub Group volume was down 6% year-over-year in the third and 8% in October.
“US import volume growth has stalled, particularly for goods from Asia,” said Ben Hackett, founder of Hackett Associates and author of the National Retail Federation’s Global Port Tracker report. statement. “Recent reductions in carrier shipping capacity reflect lower demand for merchandise from well-stocked retailers, even as consumers continue to spend. Meanwhile, the closure of factories during the October Golden Week holidays in China as well as the Chinese government’s ongoing “Zero Covid” policy have impacted production, also reducing demand for shipping capacity. on this side of the Pacific.
The fall in imports has affected freight transport, driving down container rates.
Tim Smith, director of global transportation and logistics at Old Time Pottery, a discount housewares retailer, told the Log for an october 18 article shipping companies are increasing their calls for contracts to be signed until the middle of next year.
“Not only do steamship companies inquire about contracts, they aggressively follow up when you don’t respond to them immediately,” he said.
DISCUSSION QUESTIONS: What do the declines in freight imports and freight demand say about the retail outlook over the next six months to a year? How will these developments affect the rate of inflation and subsequently retail merchandising and marketing plans?
“Retailers are going to have to work harder for their holiday sales.”