Slow start to peak freight season

According to the latest analysis from investment firm Robert W. Baird & Co., the peak shipping season is getting off to a very slow start this year

According to the latest analysis from investment firm Robert W. Baird & Co., the peak shipping season is getting off to a very slow start this year.

“Though some signs of a peak season build have emerged in recent weeks – firming ocean freight rates, anecdotes of increased shipping activity out of China by certain ocean liners – expectations for peak season demand remain low,” noted Benjamin Hartford, one of Baird’s transportation analysts in the firm’s most recent “Freight Flows” brief.

“[Domestically], truckload volumes have been largely stable in July and August, with some signs of firming in recent weeks on end-of-month volumes and tightening capacity due to East Coast weather disruptions,” he added. “But international freight volumes remain weak.”

Hartford noted that retail freight trends, in particular, have been pressured by tight shipper inventory management as retail inventory levels are very lean, as measured by the U.S. Census Bureau’s inventory/sales ratio, which was at an all-time low in the second quarter this year.

“Tight inventory levels protect downside risk to freight demand if demand trends were to deteriorate, and improved consumer confidence in upcoming months could produce a compressed peak season and demand for expedited freight modes,” he pointed out.

“That said, given the increased macroeconomic risks that have arisen in recent weeks, we remain cautious on near-term [freight] demand trends,” Hartford explained. “Though we expect industry pricing growth to continue as shippers seek to secure reliable capacity, slower pricing growth in 2012 could emerge if demand trends remain soft.”

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