Slower Peak Season: West Coast Hangover or Improvements from Importers?
They say there's no use crying over spilled milk, but if the bill for said spillage were to run into billions of dollars, we can forgive the nation's retailers for shedding a tear or two.
(At some points during the west coast's congestion problem, it probably wasn't unusual to see some operations managers in the fetal position, weeping inconsolably.)
With all of that in the distant past, however, importers can now move onwards and upwards into the next peak season, right?
Wrong, at least for companies who had to take in and hold the inventory that was held up for weeks, if not months, during the delays of last year's peak.
That knock-on effect is limiting US imports growth as we move into the second half of 2015, with a slower than expected 2015 peak season the likely result.
Peak season traditionally starts around this time of year, as retailers set in motion the shipments that will fill North American shelves as the holidays roll around. The exact dates depend on industry and demand, but peak season is always on the radar for anyone involved in or associated with the world shipping. It even has its own surcharge, so you know it's the real deal!
Congestion played a big role in disrupting the last peak season and its excess inventory will certainly impact the next seasonal peak. But some experts are questioning whether this seasonality has hit a peak of its own, and could now recede as an shipping trend as the industry develops better processes.
In terms of the balance for US imports, the congestion has also had its impact on where cargo comes in.
West coast ports are believed to have slipped around 5%, with the east and Gulf ports picking up the slack. It can cost a little more to go through these channels, and the west still retains half of all our imports, but the desire to have a reliable back-up plan is clear.
Of course, we recommend and operate a bicoastal fulfillment solution, and there may be no better time to build in the safeguards that this system offers, as trade routes continue to shift by the month.
Both the Suez and Panama Canal routes will be up and running at newly expanded capacity in the next six months. Having intake options on both sides of the country not only guards against the kind of industrial action we saw this year, it also hedges your bets on which routes will end up being the most efficient and cost-effective.
Despite all of these knock-on effects, the labor dispute is thankfully now in the rearview mirror and the Port of Los Angeles/Long Beach is looking to the future. Even when all of that inventory clears, some analysts believe that the major surges we have seen in previous peak seasons may be scaled back permanently, as importers improve their forecasting and develop more balanced intake plans, increasingly spread out through the year to avoid crucial products failing to make the shelves in time.
The true impact remains to be seen but ask anyone in the industry and you'll find few who aren't in favor of an intake curve spread more evenly across the year.