Industry Indicators: Mar 7 – Mar 13
Diesel prices keep increasing!
Source: Overdrive
According to Department of Energy’s Information Administration’s weekly updates, retail diesel prices have skyrocketed. Since the beginning of February, diesel prices have increased 40.5 cents a gallon. The national average for a gallon of diesel is now $3.143 – the highest in nearly two years.
Analysts anticipate prices to plateau in the coming weeks.
As share of total retail sales, big jump in 2020 for online spending.
source: Digital Commerce 360
Recent U.S. Department of Commerce data demonstrate the extraordinary rise of ecommerce. In 2020, consumers spent a whopping $861.12 billion online, a year over year increase of 44%. Online spending now represents over one-fifth of total retail sales. That’s approximately 5%-point gain from 2019.
Digital Commerce 360 estimated that COVID-19 boosted online shopping revenue an additional $174.87 billion. Prior forecasts showed that the 861billion in ecommerce sales in 2020 would not have been reached for another 3 years.
The overall rise in retail sales to $4040 billion may surprise many. After all, in 2020 unemployment rose to levels not witnessed since the Great Depression. And the economic turmoil and uncertainty caused by COVID-19 state-wide shutdowns should have slowed consumer demand. Nevertheless, remote work, intermittent stimulus checks, and enhanced unemployment insurance produced historical retail figures.
Finally, like nearly every other business sector in 2020, leading companies were well positioned to exploit ecommerce trends. Amazon ranked number one for 2020 web sales. It pulled in nearly a third (31.4%) of ecommerce sales growth. However, other giants like Walmart, Best Buy, Home Depot, and Target increased their market share from previous years.
Imports expected to grow and grow!
Source: National Retail Federation
The National Retail Federation (NRF) is forecasting record retail sales growth this year. Retailers are in fact importing unprecedented quantities of merchandise to resupply inventories and meet projected demand. The January 2021 retail import (TEUs – millions) figure of 2.06m represents 13% year-over-year increase and the busiest January since NRF began tracking imports nearly 20 years ago. Also, it is the first time January topped 2 million. In sum, NSF expects 2021 retail imports to smash the 22m record set in 2020.
With record ecommerce and retail spending comes headaches at the ports.
Source: FreightWaves
In February, Long Beach reported it had moved 771,735 TEUs , a 43% year over year increase and the largest rise for a single month in the port’s 110-year history. But the surge is causing major frustration and gridlock. An unusually high number of container ships remain at anchor.
A recent FreightWaves article provided a snapshot of accumulating anchorages off Los Angeles/Long Beach ports – 31 plus ships. One ship has been stuck there since Feb 27.
Just up the coast in Oakland, 13 plus ships are at anchor.
Even further north in Vancouver British Columbia 11 more ships at anchor.
The number of empty containers moving through the ports illustrate the dysfunction of the system. In February, at Port of Long Beach, empty containers shot up nearly 70% – 265,431 TEUs outbound back to Asia.
Vessel operators recognize the market and are increasing their eastbound rates for hauling goods from Asia to U.S. Consequently, operators are eager to return to Asia and take full advantage of the higher rates. In sum, ships want to get the containers back to Asia – whether those containers are full or empty. This, of course, only compounds the gridlock.
Shippers and carriers have therefore begun to rethink the way they contract with each other. It will take time to sort out the issues, but clearly the trend lines point toward more expensive contracts – advantage goes to carriers.
