Cheering for holiday freight

Cheering for holiday freight

With the holiday season approaching, manufacturers are hoping for a strong season, and early reports seem to indicate they may get it. According to a report by The Conference Board. U.S. households are expected to spend

With the holiday season approaching, manufacturers are hoping for a strong season, and early reports seem to indicate they may get it. According to a report by The Conference Board. U.S. households are expected to spend an average of $471 on holiday gifts this year, up from last year’s estimate of $449. However, according to analysts, this may not translate into a huge boost in tonnage.

Chris Brady, president of Commercial Motor Vehicle Consulting, told Fleet Owner that holiday freight has changed in recent years due to a change in spending habits. “The freight pattern is changing due to holiday gift cards, in addition to the internet. With gift cards, it dampens the seasonal growth and extends the freight season,” he said.

The Conference Board report, which was compiled through a survey of 5,000 U.S. households, concludes that 38% of all consumers will purchase gifts through the Internet, the same percentage as 2006. It also states that 91% of customers who bought gifts over the Internet last year were satisfied with the experience.

However, while the Conference Board expects spending to be up, Brady said that retailers have very conservative estimates for the holiday season and have ordered accordingly.

Brady continued that there has been a moderate growth in freight, with a 3% increase in durable goods for the 3rd quarter of 2007. Although furniture and appliances have remained steady due to a soft residential housing market, electronics, such as flat screen television sets, have been strong, and should continue to be so in the foreseeable future.

Overall estimates for personal and disposable income have increased slightly, which may give high hopes for a strong holiday season. According to the Bureau of Economic Analysis (BEA), personal income for October 2007 increased 0.2%, up to $21.2 billion, with disposable personal income (DPI) up 0.1% to $14 billion. Personal consumption expenditures (PCE) were up 0.2% to $23.8 billion.

For the third quarter of 2007, the BEA estimates the real gross domestic product (GDP) increased at an annual rate of 4.9%, up from 3.8% in the second quarter. The BEA reports the increase in real GDP was due to positive contributions from exports despite an increase in imports. They also report that motor vehicle output contributed 0.43% to the third quarter growth in real GDP, a substantial increase from a 0.03% increase seen in the second quarter.

According to the Bureau of Labor Statistics (BLS) of the U.S. Department of Labor, the unemployment rate remained steady at 4.7% in November, with an increase in jobs for professional and technical services, health care and food services, but a decrease in job growth for manufacturing and several housing-related industries. Overall, average hourly earnings rose 8 cents over the month.

Despite the positive signs, it is impossible to predict what freight will be for the first quarter of 2008 until the sales figures come in for the holiday season, Brady said. “The first few months of 2008 all hinges on the sales during Christmas. If the sales come in as planned, you’ll see moderate gains, but if it comes in below plan, retailers will have excess stock and they won’t be reordering.”

TAGS: News
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