Subscribe to our free, weekly email newsletter!


2013 Peak Season prospects are mixed, according to LM survey data

By Jeff Berman, Group News Editor
July 19, 2013

A still-slow economic recovery, fairly stagnant import volumes, fairly cautious consumer spending, low GDP growth, relatively low or sufficient enough inventory levels, and stubbornly high unemployment are a few major culprits crimping the semblance of what used to be a traditional Peak Season.

These factors—and others—remain intact and serve as the backdrop as to why Peak Season simply is not what it used to be. In recent years, there were suggestions—or even hope—Peak Season was back, based on fairly strong first half economic performances spurred by aggressive inventory rebuilds, but like then and now again in 2013, the prospects for Peak appear to be fleeting. 

That sentiment is also being played out when looking at fairly flat annual volume growth through most modes of freight transportation through the first half of 2013. But even with the current state of freight-related affairs, whether or not a Peak Season will occur appears to be mixed, according to the findings of a Logistics Management reader survey.

The survey, which polled 267 buyers of domestic and global freight transportation and logistics services, found that 51.1 percent expect a more active Peak Season compared to last year, with 38.5 percent expecting it to be the same, and 10.5 percent think it will be less active.

Interestingly enough, despite similar economic conditions compared to a year ago, this year’s survey trumps 2012’s on an optimism front, which had only 40 percent expecting a more active Peak Season last year.

Those respondents that expect a true Peak Season cited things like an improving housing market, improved access to capacity, and an uptick in some economic indicator such as consumer confidence.

What’s more, the National Retail Federation is calling for 2013 retail sales to be up 3.4 percent annually in 2013.

“The economy is beginning to grow and people are spending money,” a retail shipper said. “Companies are starting to forecast and build for their Peak Seasons rather than wait and lose revenue because product was not where it should have been when needed.”

Another shipper explained that business trends over the past five months is better than last year at this time, which he said serves as an indication that overall annual volumes will be at a higher level for this year’s Peak Season than a year ago.

Shippers not expecting much in the way of a meaningful Peak Season ostensibly uniformly pointed to flat economic conditions, with things the same compared to a year ago.

Regardless of how Peak Season may play out, more than half—or 54.6 percent of respondents—noted it has a somewhat significant impact on their day-to-day operations, with 38.6 saying it has a very significant impact.

Ben Hackett, founder of maritime consultancy Hackett Associates, said that it is fair to assume Peak Season may be somewhat tempered once again this year, explaining that consumers continue to maintain a modicum of confidence and importers have been building up their inventories.

But that does not mean everything is going great either, he cautioned, telling LM that U.S. Consumer demand still remains weak at a 1 percent growth rate even though the GDP is slightly above 2 percent. 

“The inventory-to-sales ratio has also gone up and is close to pre-recession levels that were last seen around 2006,” he said. “That is a potential warning sign and it also means there is enough inventory in stores which do not require importers to have a big Peak Season.”

And with current inventory levels appearing to be sufficient Hackett added that is hindering any reason to increase those levels.

CEVA Logistics CEO Marv Schlanger was somewhat more optimistic in terms of his expectations for Peak Season.

“I would say I am cautiously optimistic,” he said. “There is a little momentum in the U.S. economy with a somewhat brighter employment outlook and the auto market is very strong and some life in housing. Those are pretty good principles to start from and would lead me to believe this year will be better than the last few years, but it is still a little too early to point to at this point.”

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

Seasonally-adjusted (SA) for-hire truck tonnage in November was up 3.5 percent compared to October, which was up 0.5 percent over September at 136.8 (2000=100), marking the highest SA on record.

UPS said that through this acquisition it will augment its healthcare expertise and network in Europe, specifically in the fast growing healthcare markets in Central and Eastern Europe.

Carloads were up 12.1 percent at 312,271, and intermodal at 280,337 containers and trailers saw a 4.5 percent annual gain.

Total November POLB volumes were up 2.1 percent year-over-year at 581,514 TEU, and POLA volumes in November decreased 3 percent compared to November 2013 at 663,346 TEU.

When railroads are doing business with a larger than large customer like UPS, it stands to reason, it can often be the best, and worst, of both worlds, depending on how things are going. That was one of the main takeaways from a presentation by UPS Vice President of Corporate Transportation Services Ken Buenker at this year’s RailTrends conference in New York.

Article Topics

News · Inventory · Peak Season · All topics

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA