APRIL 6 I TRENDS I SHIPPING
Shipping Lags as
Retail Rebounds

Bloomberg News reported on March 30 that ports in Asia are overwhelmed with ships waiting to load up. Shipping companies can’t keep up with increasing consumer demand in the United States and Europe. National Public Radio’s (NPR) “Marketplace” reported the trend signifies retailers are stocking up again.

“And if retailers are increasing their inventories, they’re doing that because they expect to be able to sell merchandise,” the National Retail Federation’s Craig Sherman told NPR. “Retailers are definitely anticipating improvements in the economy.”

The National Retail Federation predicts the amount of cargo coming into the United States will increase by almost 20 percent this year, bringing imports close to 2008 levels. Still, it’s taking longer for retail goods to reach U.S. shores.

“Many of those shipping companies have been very reluctant to bring in capacity too quickly,” Ross DeVol, an economist at the Milken Institute, told NPR. “So they’re trying to be strategic about how they add that capacity, trying to get prices back up so that they can cover their operating costs.”

The MI Perspective
In music product retail, anticipated recovery has been behind the trend. Words, such as optimistic and starting to look better are frequently heard, but according to Music Freight founder Nick Isasi, that hasn’t translated into tangible, statistical growth or an increased demand in shipping yet.

“While [general] container imports are starting to increase, at least on the music [product] side of things, we haven’t seen a vast increase,” he said. Isasi added that he has noticed retailers ordering more but in smaller order sizes.

According to Isasi, one of the biggest recession-related shipping problems that impacted the MI industry was the 24-percent capacity drop in the Less-Than-Truckload market from 2008–2009. For domestic shipping, this has caused some carriers to wait until their trucks are full, leading to delays. And the overfilled trucks increase the risk of product damage.

Isasi recommended retailers take a more proactive role and find their own local carrier reps or search for third-party logistics companies that offer good rates and quality service. MI