Subscribe to our free, weekly email newsletter!


Peak Season shows signs of a modest return

LM reader survey points to myriad factors for Peak’s return for the first time in five years
By Jeff Berman, Group News Editor
August 27, 2010

Given the positive momentum occurring across freight trends and economic reports over the majority of the first half of the year, it was not out of the question to surmise that a real, live Peak Season may be unfolding. And it still may be, but things don’t appear to be as certain as they once were earlier this year.

Since the mid-year mark, there has been a somewhat steady downturn in the good news department, given slipping volumes across most modes of freight transportation, lagging retail sales once again, and lower GDP growth, among other downward-trending economic indicators.

What’s more, some industry stakeholders maintain that July may become the New October, when in comes to Peak Season. The reason being that inventory buildup over the first half of the year may become a permanent fixture, with retailers holding off on adding more stock in the second half of the year until it is truly needed. This would appear to be a wise move, given the inventory overhang that occurred from 2008 and 2009.

This theory was supported by the August edition of the Port Tracker report from the National Retail Federation and Hackett Associates, which is calling for July volumes to hit 1.38 million TEU (Twenty-Foot Equivalent Units) at U.S. retail container ports, compared to an anticipated 1.31 million TEU in October, typically viewed as the peak shipping month of the year.

“Shippers and importers have sort of moved ahead of the market by buying early partly out of fear that there was not going to be enough capacity later on, and it seems that they have gotten a head start,” said Ben Hackett, president of Hackett Associates. “This is what really drove the strong May-July import gains.”

July’s import strength was apparent in TEU totals at the Port of Los Angeles (POLA) and the Port of Long Beach (POLB). July imports at the POLB hit 293,878 TEU for a 32.5 percent annual gain, and POLA imports at 369,388 TEU saw a 21.02 percent annual gain.

And while Hackett is calling for July to be the 2010 peak, POLA Director of Communications Phillip Sanfield noted that the port is expecting volumes to remain strong during the third quarter, adding that the end of the inventory replenishment system may not yet have occurred.

Regardless of when Peak Season occurs, there is a cautious consensus that there may actually be one in 2010; this would mark the first time in five years there would be a Peak Season.

This was illustrated in the findings of a recent Logistics Management readership survey, which found that 53 percent—or 170 of the 320 respondents—believe this year’s Peak Season will be more active compared to last year. This edges out the 30 percent—or 96 respondents—that think things will be the same this year, and the 17 percent—or 54 respondents—calling for a less active Peak Season.

Among the reasons cited for a busier Peak Season include: increased sales and larger average orders, and higher overall business levels compared to a difficult 2009.

But as Gregg Sayers, Director, Supply Chain-Transportation, at Jacksonville, Fla.-based discount apparel retailer Stein Mart, points out, there are other factors at play that could lead to an actual Peak Season, too.

“Capacity has shrunk, and there are some challenges when it comes to re-positioning intermodal equipment,” said Sayers. “Carriers are having a difficult time getting boxes back to the West Coast, and team and single linehaul is regionally challenged. This is going to be a doozy of a Peak Season. The activity level will be driven by lack of capacity, not growth in the economy.”

Tight capacity levels present a far cry from the excess capacity heading into the 2009 Peak Season, when ships, terminals, the railways, and over-the-road transportation networks were fluid and not backed up due to increased business levels.

Another shipper respondent said that while the economy is slightly better than a year ago, more shippers are trans-loading shipments this year, making it tougher to move boxes from the West Coast.

While chances of a Peak Season are better than recent years, Brooks Bentz, a partner in Accenture’s Supply Chain Practice, said it may be a little different this year.

“I don’t think there is going to be a deluge of import freight like we have had historically,” said Bentz. “But the ocean liner companies are finding their way back to more solid footing, along with a shortage of available capacity and containers. And they are not rushing to put ships back in service, with rates going up. Slow steaming has had an impact, too. If you are a shipper and did not plan accordingly for this Peak Season, you are likely going to pay more.”

In terms of how Peak Season impacts day-to-day operations, 6 percent of LM survey respondents said there was no impact, 23 percent said the impact was not significant, 47 percent said it was somewhat significant, and 22 percent said it was very significant.

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

The study examines the trajectory of offshoring cost arbitrage to low-cost developing countries, the rise of new locations, and the fact that there’s ample room for growth.

In a rare show of solidarity, various trucking interests are asking the Department of Transportation’s Federal Motor Carrier Safety Administration to remove online safety ratings of individual motor carriers until flaws in the CSA methodology are fixed.

While it feels somewhat hard to fathom, the stage is set for the Council of Supply Chain Management Professionals (CSCMP) Annual Conference in San Antonio, Texas.

Carload volumes were up 1.4 percent at 300,388, and intermodal volume for the week ending September 13 was up 5 percent at 279,052 trailers and containers.

Company says the Cloud offering allows customers to respond more quickly to new business opportunities, without significant upfront cost and implementation times.

Article Topics

News · Freight · Trade · Peak Season · Imports · 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