In a recent webinar carried out by the Journal of Commerce the state of the supply chain was documented along with a discussion on freight shipping coupled with consumer demand. JOC Executive Editor Mark Szakonyi carried out the webinar session along with supply experts Steve Hughes, CEO of automotive supply chain firm HCS International and Dan Gardner, president of Trade Facilitators Inc.
At this time, major importers have started to experience an increase in freight costs which they are passing on. With increased inflation on the horizon, consumers will soon feel the hit.
Importers have started to increase their inventories to greater levels than they previously carried. Target and Walmart are also starting to offer impressive markdowns on their items due to the increased inventory which appears to appeal to consumers considerably.
Since last April, the inventory numbers have increased by 13%. Retailers are ordering more items to prevent any loss of sales.
The demand for shipping space has never been so high but it might actually be due to a reduction in consumer demand. Is a catch-up happening? That remains to be seen. Many believe that prices will fall in 2023. Gardner is one of the experts who thinks that the freight rates will fall in the first portion of 2023.
The amount of money currently being made is astronomical and there is an excessive amount of heat being placed on legislation to try to curb the profits. Tariffs are being removed but that probably won’t lower prices. Gardner stated on tariff removal, “The consumer calls the shots with their wallet. If a consumer is willing to pay X price, and I’m the importer and I all of a sudden get a 25% break, am I automatically going to lower prices? No. I’m going to try to get back what I lost over the past four years. If the market demands I lower my price, then I will. But that’s not a guarantee.”
In 2023, a hard pullback also might occur with consumers. However, that remains to be determined.
