The still elevated US retail inventory, coupled with slowing sales, will likely push off a significant restocking cycle and freight rebound until mid-2024, according to a recent report by Freightos.
Judah Levine, head of research at the international freight marketplace, said though US retail spending has held up, even as inflation cools, sales across major retailers have been uneven.
The report also noted that while Amazon, Walmart and TJX reported strong Q2 numbers, others like Macy's and Dick's Sporting Goods did not fare as well and are seeing "possible signs of a slowdown in consumer strength."
Freight rebound not until mid-2024
"And while a recent analysis shows US retail inventory levels are decreasing, they remain elevated and, together with slowing sales, will likely push off a significant restocking cycle and freight rebound until mid-2024," Levine said.
"Taken together, these trends support projections that import volumes likely reached their peak for the year in August," he added.
The Freightos report noted that Transpacific ocean rates climbed slightly last week, with West Coast rates up 5% to US$2,029/FEU and East Coast prices up 3% to US$3,075/FEU, both above 2019 levels.
"And though the success of August General Rate Increases was due not only to increased demand but also strict capacity management by carriers, if demand ebbs as fleet sizes continue to grow, we may be seeing peak rates for this year as well, even as some carriers have announced Transpacific GRIs for mid-September," Levine added.
The Head of Research at Freightos noted that the Panama Canal Authority announced that low-water restrictions will likely stay in place for at least 10 months, though he said, "there has not been any significant impact on container shipping via the canal yet."
"With alternatives and excess capacity in the market, it is looking unlikely that these restrictions will cause much disruption to container trade," Levine added.
The Freightos report said China - N. Europe total H1 import volumes were down year-on-year, though demand has improved since March, with June volumes 5% higher than last year and 6% higher than in 2019.
August GRIs pushed Asia - N. Europe spot rates to about the US$1,700/FEU mark and above contract levels through last week on this demand improvement and on capacity reductions, though there is scepticism that carriers will be able to sustain these prices.
For Asia-Mediterranean demand, the report said it was "resilient through June and August" with rates of US$2,300/FEU being about 20% higher than in July, suggesting volumes continue to improve.
Freightos Air Index data also showed that China-N. America air cargo rates increased for the third consecutive week last week, and at US$4.02/kg, are 15% higher than at the start of August, while China - N. Europe prices have fallen 7% to US$2.91/kg over the same period.
