Excuse me, I have an announcement to make. With apologies for interrupting your summer beach reading, it’s time to put down your book and start your holiday shopping.
True, the calendar has barely passed Labor Day, but that means by the time you’re reading these words, you’ve got only a dozen or so Fridays until Christmas. That announcement will probably make online shoppers yawn in this age of next-day delivery, but as supply chain professionals know, retailers have been hustling for weeks—even months—to stock up for the holiday rush.
While that may be true every year, 2022 is a little different. The U.S. economy continues to grow in fits and starts, whether you measure it by gross domestic product (GDP), unemployment, or the stock market. And as readers of this magazine know far too well, that sputtering expansion sends ripples through finely tuned, just-in-time supply chain delivery operations.
And it doesn’t appear things will get easier. After years of pandemic closures and rebounds, U.S. warehouses are currently packed to the rafters. Real estate services firm Jones Lang LaSalle (now known as JLL) noted in its second-quarter U.S. industrial outlook report that the U.S. industrial vacancy rate is hovering around 3.4%, a record low.
At the same time, cargo haulers are moving more goods than ever. The Freight Transportation Services Index (TSI), which is based on the amount of freight carried by the for-hire transportation industry, reached an all-time high in June, according to the U.S. Department of Transportation’s Bureau of Transportation Statistics. By the numbers, the TSI stood at 142.4 in June, which was up 1.7% from May and up 4.6% from June 2021.
Add it up, and that means there may not be enough room to store all those goods where they’re supposed to be, which is on retail shelves and the DC racks where pickers fulfill online orders.
There may be some relief in sight, as imports coming into U.S. container ports are expected to slow “significantly” for the remainder of the year, according to the latest Global Port Tracker report from the National Retail Federation (NRF) and Hackett Associates. But after a record-setting spring of surging imports, the damage is already done.
“Lower volumes may help ease congestion at some ports, but others are still seeing backups, and global supply chain challenges are far from over,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said in a release. “Our biggest concern is the potential for disruption because of separate labor negotiations at the West Coast ports and the freight railroads. Concluding both sets of negotiations without disruption is critical as the important holiday season approaches.”
Port congestion invariably leads to delays in moving goods off the docks, so logistics professionals are paying close attention. As one example, the New Jersey-based drayage service provider Book Your Cargo said in August that it foresees “significant capacity crunches and rate hikes” in the wake of recent trucker protests at West Coast ports.
“The predicted crunch will be further exacerbated by the peak holiday season approaching and vessels beginning to travel to the U.S., now that the lockdowns have been lifted in China. As a result, the sooner importers, exporters, and shippers can secure their drayage carrier, the more likely they will be able to keep logistics costs [under] control and get cargo delivered in a timely fashion,” Book Your Cargo CEO Nimesh Modi said in a release.
Take all those economic indicators together, and it doesn’t bode well for procrastinators. And I’m not just being a scold; I am an official member of the Procrastinators’ Club myself, since this column was due to my editor a week ago.
But if you want your holiday gifts to reach the doorstep in time for family gatherings, you’re going to have to get your orders in earlier than usual. And hey, if that approach doesn’t work, maybe you could just regift that beach book you’re about to finish. Just be sure to blow the sand out from between the pages first.