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According to various experts, the peak holiday season will not be the same as in previous years.
Retailers this year are working to clear stock piles as demand in the fourth quarter. Ocean carriers face more sails. Port congestion has shifted from the West Coast to other areas of the United States. Meanwhile, shippers keep tabs on labor negotiations as they craft their logistics strategies.
To get a better pulse of the logistics environment, we asked four experts: What’s in store for ocean shippers and airlines this holiday season, especially as congestion and inventory trends shift?
Some answers have been edited for length and clarity.
Director of the Ocean at Ch Robinson
Ocean Shipping is now very different from last holiday season when many companies were hoping Santa would bring them a shipping container for Christmas. While tariffs are down across trade lanes and capacity is healthy, global schedule reliability is still far from normal and shippers should base their expectations on local deliveries in 2023 before the pandemic hits global reliability of schedules was about 80% . After hitting a low of 30.9% in January, it has risen this year but only to 46% so far.
We haven’t seen the traditional peak season in the ocean this year as retailers have delayed inventory and sometimes even canceled orders. During the pandemic, many shippers switched from sea to air freight to move goods with urgency as retailers faced empty shelves and manufacturers experienced part shortages. But now some air shipments are returning to ocean as shippers try to cut costs.
Some shippers may still experience delays this holiday season in West Coast City & Saint Louis. It is sometimes possible to mitigate some of these disruptions by allowing shippers to identify in advance which rails a Steam Disk line has agreements with. For example, getting the Ocean Line-and-Rail combination of freight in North Chicago versus South Illinois can give shippers a faster delivery time and cheaper cost to their destinations.
Senior Vice President of Ocean Freight for North America at CEVA Logistics
The ocean market this holiday season will definitely be softer than the past few years. While current import stats still show growth, most of the volume can be attributed to clearing West Coast congestion, which has improved dramatically over the past 60 days. This factor is accompanied by a reduction in total exports from the manufacturing capital of the world. In response, airlines are taking aggressive approaches in blanking certain sails and canceling certain rotations to deal with reduced demand.
CEO and founding member of Ship4WD
This year we’re not seeing the “normal” Pe Holiday season peak that we’ve seen in previous years. Indeed, it reflects the high inventory and the drop in consumer demand. As a result, we are seeing a decline in sea rates for all stores, particularly in the US West Coast where port congestion has eased. This is a clear indication that we are returning to a pre-Covid-19 environment where importers, exporters and the end consumer are benefiting.
Principal Advisor at Proxima
Peak shipping shipping is mostly behind us as we have been keeping retailers warehouses in the areas of onward placement penalties in the areas of supply chain bottlenecks for months. Ongoing supply chain discussions are now focused on strike threats and tightening capacity.
Historically, the West Coast ports have been an important indicator of ocean freight. However, that only tells part of the story. Due to the threat of strikes from ongoing labor negotiations, shippers have diverted volumes to east and Gulf Coast ports to keep cargo moving. While West Coast volumes declined in the first 9 months of this year compared to previous years, ports on the East and Gulf Coasts continued to post.
Companies are looking to refill models versus forward stocking models as inventories pile up, demand decreases and ocean rates from Pandemic Highs drop.