Back-to-school season is in full swing, bringing with it an early start of the traditional “peak shipping season.” However, that term is creating more concern than excitement this year due to ongoing constraints in the supply chain across all modes and most areas worldwide. As consumers rush to find needed school supplies and clothing and seek out technology purchases and dorm room furnishings, retailers continue to struggle to maintain inventory under the weight of the demand.
The National Retail Federation (NRF) estimates that “families with children in elementary through high school plan to spend $848.90, $59 more than last year, on average on back-to-school items. Total back-to-school spending is expected to reach $37.1B, up from $33.9B last year and an all-time high in the survey’s history. College students and their families are also setting records in spending. Total spending on back to college is expected to reach $71B up from $67.7B in 2020.” The anticipated increases are due to elevated costs per item this year and more students returning to physical classrooms after much of the world was sequestered to online studies this past year.
The anticipated record spending on back-to-school items has led retailers to expect the same consumer reaction for the holidays. As a result, retail freight is arriving on our shores at an accelerated peak season pace this year, with the impacts felt throughout the U.S. supply chain. With the vast amount of imports needed, ports across the U.S. continue to break records with historic numbers of ships at anchor, waiting to be received at congested ports laden with containers. Cartage companies continue to have limited chassis and equipment, causing additional delays. At the same time, local warehouses struggle to keep up with demand to turn freight into rail and trucking lanes for distribution around the country. Skilled labor shortages across the transportation industry continue, also impacted by the continued spread of the COVID-19 Delta variant.
Suppliers worldwide continue to experience the significant impacts of the virus’ resurgence, as much of Southeast Asia is experiencing lockdowns while countries try to contain further spread. With that comes additional strains to retail markets and manufacturing sectors, as products from the region will not be produced at the anticipated levels. IHS Markit reports that outputs and new orders from the region’s factory sector “fell for the third straight month, reflecting ongoing challenges posed by the reintroduction of stricter containment measures.” In addition, many manufacturers struggle with everything from a limited workforce to securing raw materials to port congestion, which leads to limited container accessibility, significantly extending manufacturing lead times.
Even with the current issues, the NRF forecasted August imports at a whopping 2.37 million TEU (twenty-foot equivalent unit), topping the charts as the highest volume of containers on record imported in a month. They speculate that retail imports will top 25.9 million TEU in 2021, a substantial increase from the previous record set in 2020 at 22.0 million TEU. With the continued strain on the worldwide logistics supply chain, capacity is expected to remain constrained, keeping costs at record highs. As we head into the 2021 holiday season, consumers are advised to have patience with shipments and prepare early to avoid disappointment.
Who says logistics has to be complicated? We certainly didn’t. Contact the Ascent team to learn more.