Early U.S. Back-to-School Retail Sales Accelerate Peak Ocean Demand | kbnmart

Retailers Walmart, Target and Shein are starting back-to-school sales early to prevent Amazon.com’s Prime Day event from sucking up U.S. backpack and laptop sales, helping to push the peak shipping season forward by two months and boosting already high shipping rates.

“July this year actually looks like it’s the peak of the peak (season), not the beginning of it,” said Stephanie Loomis, head of ocean freight for the Americas at Renus Logistics.

Retail accounts for nearly half of U.S. container import volumes. The ocean shipping industry handles about 80% of global trade.

Goods have been moving earlier than usual since late last year, when Houthi rebel attacks near the Suez Canal trade shortcut forced ships to take the longer route around Africa. Denmark’s AP Moller-Maersk, a leading container shipping company, said on Wednesday that disruptions in the Red Sea had spread beyond badly damaged trade routes in the Far East and Europe to its entire global network.

NikeOpens a new tab Executives said they imported U.S. shipments of sneakers and apparel during the March and May quarters, when they had originally planned to import them during the June and August quarters. Footwear retailers, which account for 95% of U.S. footwear sales, are among the importers that have accelerated shipments, said Matt Priest, chief executive of the Footwear Distributors and Retailers Association of America.

Some importers have also accelerated schedules to overcome higher costs caused by new tariffs on computer chips and electric vehicle batteries, or to avoid disruptions during labor talks covering dock workers on the U.S. East Coast and Gulf of Mexico, industry experts said.

The early surge in demand has helped push the cost of sending a standard 40-foot (12-meter) container of toys, T-shirts or steering wheels from Shanghai to New York to nearly $10,000, double the cost in February, according to the Drewry Global Container Index.

That has raised concerns that a prolonged period of higher interest rates could translate into more price increases for inflation-stricken U.S. shoppers.

Container imports to the United States grew 11.9% year-over-year in May and 10.4% in June, according to supply chain software company Descartes Systems Group.

The increases came as major retailers set back-to-school sales earlier to counter Amazon.Opens a new tab Amazon has announced Prime Day for Tuesday and Wednesday this week, which the e-commerce giant is calling its biggest ever. Amazon is urging sellers to stock up on sales events at least a month in advance.

“We’re seeing fall fashion, Halloween and holiday products moving through the supply chain,” said Gene Seroka, executive director of the nation’s busiest seaport, Los Angeles.
Some of these items are already in stores. Home Depot this week began selling a line of outdoor Halloween decorations, including “Skelly,” a 12-foot-tall (3.7-meter-tall) robotic skeleton.

Seroka expects strong imports in July, noting that 63 ships are on their way to the port complex in Los Angeles and Long Beach, compared to 52 to 55 normally.

Priest said logistics executives are trying to avoid a repeat of the supply chain disruptions that followed former President Trump’s tariffs on China, the onset of the pandemic and the Red Sea attacks.

“The last few years have really created, for lack of a better term, post-traumatic stress disorder,” Priest said.

The early start of the ocean freight peak could also mean an early end to the high rates that have some shippers fearing a return to record container shipping rates.

“We could see peak demand in July and August, and some softening of demand starting in September,” said Judah Levine, head of research at Freightos, an international shipping booking and payment platform.