Market Update
2020 has been anything but a typical year in transportation (and in every regard, for that matter). Our market updates throughout the summer followed the bizarre happenings amidst the COVID-19 outbreak. Freight volumes plummeted in the Spring when international passenger flights halted. However, the second quarter proved a shocking one when import volumes increased, as did consumer demand for goods.
Now with the fourth quarter underway, we are getting a better idea of what the future holds. According to a post by FreightWaves, “goods demand is now 6% higher than it was prior to the pandemic.” You can view the full infographic below, which visually demonstrates current supply & demand as well as inventory-to-sales values.
Infographic by Emily Ricks | Freightwaves.com
As the graphic shows, U.S. import volumes declined constantly from February to May. June and July offered volume increases, and August saw the highest level of imports since the pandemic reached the United States. After months of waning volumes, international freight is now entering the country in droves.
According to FreightWaves, this is just the beginning of the “restocking bonanza.” It won’t come as a surprise that consumers are spending less on service-oriented industries such as travel, theme parks, and movie theaters due to COVID-19 and its related restrictions. But, consumers have repurposed this unspent cash towards the goods market, purchasing household items and electronics in lieu of entertainment activities. As the graphic above shows, the demand for goods is now 6% higher than it was before the pandemic.
What does this mean?
For one, it looks like the global supply chain will be plenty busy well into the coming year. As imports flood into our domestic seaports and airports, retailers will be working tirelessly to keep their shelves stocked to meet consumer demand. Further, transportation and warehouse providers will have their hands full with a steady flow of goods.
It’s also worth considering the upcoming holiday season. Late fall/early winter generally serves as the peak season for freight because of heightened spending around Christmas time. If the first 3/4’s of the year is any indicator of consumer behavior for the next few months, many families will trade-off holiday travel plans for increased spending on goods. In other words, it’s going to be a good quarter for freight, but not for Disney World.