Holiday Predictions

Yes, we know it’s not even Halloween, but stores are already starting to plan for the holiday season and build their inventories. Despite economic uncertainty and downward forecasts, many retailers are optimistic, especially those with online marketplaces which have shown resiliency. Food prices have remained consistently high however and gas prices are rising again, major factors likely to affect discretionary spending by those with less disposable income. According to a Holiday Trends report by ShipStation. “58% of US Consumers expect to cut back on nonfood spending…this could mean a 14% spend reduction from last year.” It remains to be seen how shoppers will behave when the holiday season arrives and with it the temptation of all manner of goods and sales.
Too Many or Not Enough

Warehouses are being built at a rapid pace in some parts of the country but remain in short supply in others. The building of warehouses in an area is usually met with a positive reaction because it means jobs, tax revenue, and opportunities for an improved supply chain. But groups in southern California and now some on the east coast are pushing back on their proliferation, asking for a moratorium on industrial development. Los Angeles has seen huge growth due to its proximity to ports and rail services. Los Angeles and Long Beach are global hubs that handle 40% of the nation's imports. Many small businesses in other regions of the US desperately need more warehouse space and just can’t find it, limiting their ability to grow. Their best option is often to outsource inventory and shipping to a third-party logistics provider so they can continue to expand. It’s glut and famine depending on your location.
Major Carrier Increases

Both UPS and FedEx have signaled there will be a significant increase in their ground shipping charges next year, a move bound to affect small and midsize shippers in spite of negotiated discounts. These major carriers are looking to offset the higher costs of inflation and labor, even while parcel delivery volume is predicted to decrease in 2023. One relationship likely to be adversely affected is between Amazon and UPS, where a reduction in package deliveries would allow Amazon to insource and handle more of the volume. UPS has publicly said Amazon currently accounts for 11% of its revenue, although Morgan & Stanley estimates that share of revenue is much higher. UPS is facing a potential loss of business, and FedEx has its own problems evidenced by weak financial results earlier this year.
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Contact Todd Flaherty, Partner to discuss your business needs.
Todd Flaherty | (207) 610-7748 | tflaherty@shipright.biz
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