Believe it or not, it's time to start talking about the fall and holiday buying seasons — especially in terms of how much truck freight we can expect them to generate this year.
Retailers need to make purchasing decisions now about apparel, electronics and household goods if they want the products on their shelves in time for these two critical buying seasons. And based on those decisions, fleets have to make some decisions of their own about how they're going to allocate equipment in the months ahead.
Overall, I think retailers can expect a rather robust consumer goods market toward the end of 2003. Here's why. A significant portion of household wealth is still parked in money markets while people wait for the stock market to give them some reason to get back in that game. This liquidity, coupled with the stabilization of the labor market, may release some of the pent-up enthusiasm that is the cornerstone of the U.S. consumer.
If my analysis is on target, consumer goods should start to move quickly towards the end of July and throughout August. And the increase over first- and second-quarter levels should be even higher than it was last year.
First of all, there's been a significant improvement in consumer attitude and behavior. In addition, the first half of 2003 saw only flat-to-moderate growth.
I think we can expect gains in freight volume of at least 3% to 4% over 2002 levels for July through October. Much of this will be the result of an increase in imports from Asia.
But carriers need to realize that relative lane volumes will be very different from those that occurred in 2002, when the dockworkers' strike made it necessary to move freight directly inland before breaking it down for distribution across the country. This year, much of the freight breakdown should take place right at the ports of entry.
Consequently, carriers should base equipment allocation on the relative lane volumes as they appeared during 2000 and 2001. It's highly unlikely that we'll see the Los Angeles/Long Beach to Middle America volumes as out of proportion as they were last year.
Freight movements should also go more smoothly this time around, since we won't have to contend with the disruptive bottlenecks caused by the strike.
Once again, however, world events are likely to throw a monkey wrench into carriers' collective ability to plan beyond a somewhat limited time frame. The SARS situation, for example, could cause a slowdown in getting some freight through customs in a timely fashion.
At this point, we don't know how long the virus can remain active, which means we don't know whether the time elapsed between production in Asia and arrival at a U.S. port is enough to assure that any freight that might have been tainted is now safe for distribution to our consumers.
When talking about the impact of SARS, it's important to distinguish between disruption in the travel sector and disruption in the production pipeline. The travel industry and related service sectors will surely feel the brunt of the SARS crisis. But as long as production is not affected, commerce in general should remain intact. It's possible, however, that the U.S. may embargo freight from countries where SARS is not under control.
Overall, I think the SARS situation will probably have only a minimal impact on fall and holiday freight traffic. I'd rather focus on the good news: freight levels will be up throughout the U.S.