Transportation Sector Watching for Peak Season with Anticipation

Commentary:

The transportation sector has gone without a traditional peak season for several years now. This year was setting up to be one of the exceptions and perhaps a return to normalcy for the traditional peak. But that may be changing. Several transportation industry groups are suggesting that some of the peak season may be hitting US shores now – and could be offset later by more conservative buying practices by supply chain managers. If we assume that part of the trade imbalance is currently attributed to building inventories, then there will be a traditional peak only if consumer demand finds some robust activity during back-to-school. Given some of the financial metrics we see with retail sales and consumer spending that may be a stretch. If there were also some activity heating up more aggressively in the jobs market, we could also have some optimism that the fall peak would be more robust.

A report from the nation’s maritime ports issued over the weekend suggested that the industry should get ready for some softening of volumes moving into the traditional peak. Very important: year-over-year comparisons of volume will still show significant improvement over a really bad 2009. The transportation providers in the industry will still be profitable. But, to start to get any comparisons to pre-recession levels will be a stretch for what was anticipated to be a highly aggressive 2010 inventory rebuilding year and return to normal shipping activity.

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