Logistics and transportation news: Forecast calls for another slow peak season

As freight volumes are in their fourth consecutive year of decline, it is not a stretch to admit “Peak season”—as we once knew it—is significantly different from what it was in past years.

This view is corroborated by the findings of a recent LM reader survey, coupled with analyst and shipper analysis, which indicates the lack of a true peak is, in fact, “the new normal.”

Major takeaways of the LM survey found that a cumulative 82 percent—or 373 of the 448 respondents— think this year’s Peak Season will be similar or less active compared to last year, with a mere 18 percent—or 85 respondents—contending it will be more active.

Reasons cited by respondents for another slow peak included: less demand, a need for lower inventory levels, the recession, sluggish consumer spending, and low import volumes, among others.

“There are no positive signs that customer demand has increased to previous year’s levels, or even close to them,” said a shipper. “Our customers are requesting Just-In-Time shipments instead of building inventory in their warehouses. And retailers still have excess inventory and with the recession ongoing, they are not ramping up their inventories.

The lack of meaningful inventory build-up is not likely to fade anytime soon, considering the Department of Commerce’s recent report that U.S. business inventories decreased 1.0 percent in July from June at $1.333 trillion and were also down 11.8 percent from July 2008. A Wall Street Journal report noted this reflects how businesses are slowly getting rid of excess goods that accumulated during the recession.

A lack of inventory build up and lack of meaningful consumer spending are also reflected in the low volumes at the Ports of Los Angeles and Long Beach—the two highest volume ports in the U.S.—which have been down for more than two years, due to the economy, changes in order patterns by shippers, and capacity continuing to be routed away from these ports. Year-over-year volumes at both ports are down, with total containers at the Port of Long Angeles, year-to-date through August at 4,374,818, which is down 18.3 percent compared to last year. And at the Port of Long Beach, total containers handled through August are 3,259,427, which is down 25.1 percent from last year.

Read the rest of the logisticsmgmt.com article here.