2019 Peak Season Shrinks Along with Warehouse Space and Transportation Options
Last year at this time, peak season forecasts were pretty rosy in the world of transportation and logistics, but now with the escalating trade-war between the US and China, warning signs of a sluggish global economy as well as a manufacturing slowdown are all around us.
US imports are up 1.6% over the last six months, compared to 6.5% last year. More than a third of respondents to a Logistics Management survey this year expect peak season to be less active — vs. 10% last year. If imports continue at the pace of the first half of 2019, this year’s peak will be smaller than 2018.
Adding to customer woes, warehouse space remains near capacity due to companies using inventory pull-forwards to evade the Trump administration’s 30% tariff increase on popular goods from China.
“I keep wondering where all the peak-period imports will go, given the stories I continue to hear of companies still storing goods they brought in late last year under tarps out in the employee parking lot,” said Jack O’Connell, International Trade Advisor for Beacon Economics.
Not only is that bad for those looking for storage, those warehouses full of inventory cause stagnation in the economy.
“There appears to be a huge amount of unsold inventory in the supply chains. It bears repeating that people should not assume that all imported goods go directly into the consumer market. Importers of machine parts or intermediate goods or institutional cleaning supplies who stocked up in the last quarter of 2018 may not be big importers this summer and fall,” said O’Connell.
It may be that peak season came and went during the pull-forward surge.
Another supply chain concern lies with transportation. After a 31% increase in shipping costs from February 2017 to February 2018, shippers felt slight relief in 2019, but an on-going driver shortage has made it even harder for shippers to secure reliable transportation capacity.
Having a close relationship with a proven 3PL partner — and maintaining it through especially difficult times — can help uncover hidden capacity not available to speculating companies. Adding lanes, drivers and doors for an existing customer is much more likely to occur when resources are scarce than it is for an unknown or unproven company