A few weeks ago, in this space, I wrote a column, entitled “The only thing certain about the economy remains economic uncertainty.” Well, guess what, not much has changed, regarding that thesis, and that should surprise exactly nobody, really.
But, at the same time, there are many things to assess and gauge, when examining the prospects for an economic recovery, of sorts. The thing is, though, they are from what could be viewed as disparate sources, focusing on certain aspects of the economy, from both a freight and general, or macroeconomic, perspective.
One of the most eye-catching things people are focused on is the lower United States-bound import numbers that have been in effect, for several months now. That was especially evident in recently-released February volume numbers respectively issued by the Port of Los Angeles and the Port of Long Beach. In short, the reported volumes pointed to a 41% annual decline in imports at the former and a 34.7% annual decline, for the latter.
To be sure, these are attention-grabbing numbers, no question about that. As for the factors driving these low numbers, they include things like: an overall slowdown in global trade, due to less consumer-driven demand; overstocked warehouses; labor uncertainty at West Coast ports; and still-high inflation, among other factors, too.
What’s more, shifting away from the ports, an easing has been seen on the manufacturing side, in recent months, with the Institute for Supply Management (ISM) observing over the past few months that new orders, the “engine that drives manufacturing,” have come in at a reading below 50 (a reading of 50 or higher indicates growth is occurring) for the past six months through February.
Of course, there are other metrics, too, including rail and intermodal and trucking volumes, none of which could be viewed as booming, but that comes with the caveat that there is, or has been, industry sentiment suggesting that that second half of 2023 could see a material uptick in freight activity, due to things like excess inventories being worked, coupled with a return to a more typical, or pre-pandemic, patterns in consumer demand. But that is far from certain and was made very clear in a Wall Street Journal article posted this week.
The article explained that freight transportation and logistics services providers have shifted gears, in a sense, in terms of their original expectations that “demand will recover slowly in the second half of the year amid growing economic uncertainty and signs retailers are growing more guarded about placing big orders in 2023…Logistics executives say the volumes of goods moving through supply chains have tailed off more than anticipated to start the year, while broader indicators such as retail sales figures are raising concerns about the direction of the economy.”
So, where does that leave things? In an ongoing state of uncertainty, it seems. In a sense, that is the world we have been living in, going back to the onset of the pandemic in March 2020. We knew things would not change overnight, not at all. But there has, or had, been a feeling that more normal and stable times were coming sooner than later. And, now, that really may not be the case, it seems.
The saying “timing is everything,” is very accurate, when it comes to many things. But, when it comes to highlighting when the supply chain—and the economy—does return to a sense of normalcy, well, that continues to remain speculation, at this point.