SIMIC

THE anticipated peak season for supply chains is commencing with little fanfare, offering little hope for a resurgence in freight demand, reports the Wall Street Journal.

Traditionally, the late summer to fall period marks the zenith of activity in supply chains, with retailers hurrying to stock up on clothing, electronics, and holiday decorations for the upcoming consumer rush, while freight operators aim to capitalise on the heightened demand.



However, this year's peak shipping season is unfolding quietly. Merchants and consumer goods suppliers still work through excess inventories accumulated during the Covid crisis.



Logistics companies are grappling with subdued volume and freight rates significantly below those of the previous year.



The flow of goods into US ports, extending through trucking and rail networks to reach distribution centres and stores, has consistently lagged behind 2022 levels.



The National Retail Federation projects a slight import decline for September and October. Logistics firms gauge shipping demand based on retailers' inventory levels and the pace at which they plan to restock.



In July, the Logistics Managers Index hit its lowest point in its six-and-a-half-year history, coinciding with dwindling inventories.



Retail giants like Walmart, Target and Home Depot have made progress in reducing excess inventory but remain cautious about flooding the market without clear consumer demand signals.



Target's chief financial officer Michael Fiddelke, emphasised this caution, citing the company's efficiency efforts and lean inventory position.



Michigan State University's supply chain management department interim chairman Jason Miller stated retailers still have elevated inventories, particularly in categories like clothing, household appliances, and smartphones.



Americans are redirecting their spending toward services and experiences such as vacations and dining out, reducing expenditures on a wide range of goods.



Even major retailers like Walmart are witnessing shoppers prioritise essentials like groceries over consumer goods, typically the focus of peak-season demand.



This shift in consumer spending patterns, coupled with economic uncertainty, is prompting retailers like Macy's and Dick's Sporting Goods to scale back their orders.