Back-to-school season is already underway as retailers like Shein, Macy’s, Walmart and Target areestablishing promotions that will last through the summer. But the season’s early kickoff has been heavily influenced by various concerns from shippers regarding the ongoing diversions of container ships around Africa, a potential labor strike at East and Gulf Coast ports and continually escalating freight rates—and bodes a similar expectation for the 2024 holiday.
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Retailers have been stocking up to meet demand ahead of the traditional August-to-October peak shipping season since Lunar New Year in some cases, with inbound cargo volume at major U.S. ports in May reaching its highest level since August 2022.
There is “modest” evidence of the early shipping continuing into June, said S&P Global Market Intelligence, with seaborne imports into the U.S. rising by 1.7 percent in the month versus May. The firm says a normal shipping season would suggest a dip in June, like the previous two years, before picking up again in July.
“What we see right now is that we have a peak season at a moment where it’s not supposed to happen,” Goetz Alebrand, head of ocean freight Americas at DHL Global Forwarding, told Sourcing Journal in late May. “All that is right now pushed forward, and we believe it’s going to carry through until at least end of August or early September because of the of the ILA topic here in North America.”
However, given that the excess imports have been flowing into the U.S. for months, ports should still be able to manage the next wave of cargo once the typical peak season begins next month.
“It’s not that we think that on top of peak season, there will be another peak season,” Alebrand said. “It’s just a prolongation, that we will have a relatively elevated demand cycle for a longer period of time that we are used to.”
Gene Seroka, executive director at the Port of Los Angeles, said during a press briefing Wednesday that the port is already seeing fall fashion, Halloween and year-end holiday products moving through the supply chain.
According to Seroka, the port expects robust imports in July, noting that there are 63 ships en route to the Los Angeles and Long Beach port complex, versus 52 to 55 typically.
During the briefing, Matt Priest, president and CEO of the Footwear Distributors and Retailers of America (FDRA), said the footwear industry is “bringing product in a little bit earlier” for the holiday season, and that brands are “trying not to be a victim of these historic and seasonal spikes and run-on demand.”
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While FDRA members had seen rates go up based on the current Red Sea-driven capacity and congestion challenges, Priest noted that “spot rates are starting to ease up a bit.”
Drewry’s World Container Index (WCI) appears to support the FDRA’s assertion. While spot rates on the WCI per 40-foot container have skyrocketed nearly 330 percent since Nov. 30 to $5,937 per 40-foot container, the rates have only increased just over 1 percent since July 4.
Once such cause for much of the 2024 freight rate increase tied in with the capacity crunch out at sea. Joseph Firrincieli, a sales supervisor at freight forwarder OEC Group, noted last month that he had seen more carriers bring back premium rates for guaranteed vessel space, a practice that was more abundant during Covid.
“It seems as though a lot of customers, due to the fear of not getting product on time, have been choosing those options, and willingly paying more to ensure that they get their cargo here on time,” Firrincieli told Sourcing Journal. “At the end of the day, if you’re delivering to a customer like Walmart, or any of the big box retailers, the price in paying for expedited premium option shipping is still cheaper than, if they’re delayed, to deliver it to one of these big box retailers due to chargebacks and cancellations.”
Spencer Frazier, executive vice president of sales and marketing at logistics services provider J.B. Hunt, said in a recent earnings call that some customers have pulled “a portion” of their peak freight forward a couple of months, but noted the push for now has still largely been confined to ocean freight.
“This pull forward has created an early peak on the water, but that hasn’t translated into domestic inland moves just yet,” Frazier said.
Given that the timing of the traditional peak shipping season is almost here, Firrincieli still advises importers to ship earlier, and to get overseas suppliers to ensure their cargo is ready earlier.
“If there’s any slight risk with potentially not getting here on time to the premium option, look into air freight ,” said Firrincieli. “Unfortunately as expensive is all these things are, like I said earlier, it’s still going to end up being cheaper than waiting.”
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