Pre-Holiday Shipping Demand Will Further Test Supply Chain: Analysts

The ‘peak’ shipping season is already underway as shoppers appear to have begun purchasing holiday gifts and other items earlier than usual, raising concerns over shipping delays and capacity and which has already strained international supply chains this year.

“There’s a shortage of truck drivers, there’s congestion at the ports and in between the warehouses [that] are full and the third-party people, who buy items from overseas and sell them here, they’re having trouble figuring out the pricing,” Georgia State University Economist Rajeev Dhawan told Transport Topics. “If you haven’t bought your gifts this month, you’re probably out of luck. The stuff may not even show up.”

American Trucking Associations Chief Economist Bob Costello is not as pessimistic, but he told TT that many shoppers are buying gifts now.

“Households have money to spend,” he said. “I think things may be spread out a bit more for our industry as consumers are worried about getting products, and they’re starting to buy holiday goods already, and that’s not a bad thing for us. If that can be spread out, the demand for trucking services spread out more than normal might help the tight capacity situation in the industry. I think consumers are worried.”

Costello said trucking capacity remains tight as many fleets have parked their trucks because of the driver shortage. New trucks, too, are harder to come by because of the lack of semiconductor chips, which is slowing or stopping assembly lines.

“The shortage of trucks is a big deal,” he said. “Fleets are having to cannibalize their older trucks, taking parts off of them, to keep fleets going.”

Shipping costs continue to skyrocket, several times above the rate they were a year ago during the depths of the COVID-19 pandemic.

“We’re in peak season now, but we’ve been in peak season for 15 months,” XPO Vice President for Strategy Kevin Sterling told TT. “It’s a tight capacity environment, but Christmas is still coming on Dec. 25. That hasn’t changed.”

Sterling said the pandemic, the driver shortage, tight freight rail capacity, a lack of chassis at ports and inland intermodal facilities, and the lack of available warehouse space is combining to make the supply chain situation one that may not be resolved until 2023 at the earliest.

Full story here.

 

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