Retailers' early US back-to-school sales hasten peak ocean shipping season

Descartes Systems group

19/07/2024 11:00

* 
      Retailers account for half of US container import volumes
    

        * 
      Goods also moving earlier due to Suez Canal disruptions
and new
tariffs
    

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      Early peak season could mean early end to soaring freight
rates
    

  
    By Lisa Baertlein
       LOS ANGELES, July 19 (Reuters) - Retailers Walmart
 WMT.N , Target  TGT.N  and Shein kicked off back-to-school
sales early to stop Amazon.com's Prime Day event from siphoning
U.S. sales of backpacks and laptops, helping advance the peak
ocean shipping season by two months and boost already-high
freight rates.
    "It looks like this year, July is in fact the peak of peak
(season), instead of the beginning," said Stephanie Loomis,
Rhenus Logistics' head of ocean freight for the Americas. 
Retailers account for roughly half of U.S. container import
volumes. The ocean shipping industry handles about 80% of global
trade.
Goods are moving earlier than normal since late last year, when
Houthi rebel attacks near the Suez Canal trade shortcut forced
cargo vessels to take the longer route around Africa. Denmark's
A.P. Moller-Maersk  MAERSKb.CO , a top container shipping
provider, said on Wednesday that Red Sea disruptions have
cascaded beyond the hard-hit Far East and Europe trade routes to
its entire global network.
 Nike  NKE.N  executives have said they imported to the U.S.
shipments of athletic shoes and apparel during the March-May
quarter that they originally planned for the June-August
quarter. Members of the Footwear Distributors and Retailers of
America, who account for 95% of U.S. footwear sales, are among
the importers who have accelerated shipments, said Matt Priest,
the industry group's CEO. 
Some importers have also sped up timelines to beat higher costs
from new tariffs on computer chips and electric-vehicle
batteries, or to avoid upheavals during labor talks covering
dockworkers on the U.S. East Coast and Gulf of Mexico, industry
experts said.
The early demand surge helped propel the off-contract cost of
sending a standard 40-foot (12-metre) container of toys,
T-shirts or auto steering wheels from Shanghai to New York to
nearly $10,000, double the cost in February, according to the
Drewry World Container Index.
     That has stoked worries that an extended period of elevated
rates could translate into more price increases for
inflation-squeezed U.S. shoppers.
     
     HALLOWEEN IN JULY
  
    Year-over-year U.S. container imports grew 11.9% in May and
10.4% in June, according to supply-chain software provider
Descartes Systems Group  DSG.TO . 
Those increases came as major retailers scheduled back-to-school
sales earlier to counter Amazon's  AMZN.O  Prime Day event on
Tuesday and Wednesday this week, which the e-commerce giant said
was its biggest ever. Amazon pushes its sellers to position
inventory for sales events at least a month in advance.
     "Now we're seeing fall fashion, Halloween and year-end
holiday products moving through the supply chain," said Gene
Seroka, executive director of the nation's busiest seaport in
Los Angeles.
Some of those goods are already in stores. Home Depot  HD.N 
this week begins selling its outdoor Halloween decor lineup,
including "Skelly" a 12-foot (3.7-meter) robotic skeleton. 
Seroka expects robust imports in July, noting that there are 63
ships en route to the Los Angeles and Long Beach port complex,
versus 52 to 55 typically. 
Logistics executives are trying to avoid a repeat of the
supply-chain upheavals that followed former President Trump's
China tariffs, the pandemic's start and the Red Sea attacks,
Priest said.   
"These last few years have really created, for lack of a better
term, PTSD," Priest said, referring to post-traumatic stress
disorder. 
The early start to peak ocean shipping could also mean an early
end to soaring rates that have some shippers fearing a return of
record container freight prices.
    "It's possible that we'll see peak demand in July and
August, and some easing of demand starting in September," said
Judah Levine, head of research at Freightos  CRGO.O , an
international freight booking and payments platform.

 (Reporting by Lisa Baertlein in Los Angeles and Arriana
McLymore and Siddharth Cavale in New York; Editing by Richard
Valdmanis and Rod Nickel)
 ((mailto:lisa.baertlein@thomsonreuters.com))