SME shippers may represent carriers’ best chance of rescuing their peak seasons amidst ongoing weak demand from larger retailers, but they must strike before any economic rebound or risk being priced out, reports the Loadstar.
Weak demand from larger retailers
Shipping advisor for The Kemmsies Group, Dr Walter Kemmsies, said he was already “seeing the likes of BNSF and JB Hunt offer discounted rates” as they search for spare volumes, and said from where he sat, “there was only one game in town”.
“Carriers always focus on big shippers, as it’s easier to move a million tonnes for one client than for 25,” he said in an interview to be published in Voice of the Independent.
“But right now, they’ve a problem in that those big shippers overstocked during the pandemic and their stock remains stubbornly high, they’re not selling and I don’t see them ordering space on ocean carriers any time soon.”
“By contrast, SMEs are understocked, so they look a much more appealing prospect.”
Sudden rush for space
While Dr Kemmsies believes ocean freight’s only chance of a peak season is by turning to SMEs as they seek capacity, he expects to see a sudden rush for space from larger shippers when “they realise the looming US recession is not coming”.
Contrasting popular reports, he said the “present economic wobbles” were the result of a failure of retailers and economists to recognise the impact of pandemic-era spending.
“Retailers inundated supply chains with commodities during Covid, but as countries came out of lockdown, I believe they failed to consider how this would lead to less spending on consumables and more on services,” said Dr Kemmsies. “Rather than acknowledge this mistake, we saw CEOs of poorly performing businesses talking the US into recession by claiming consumers were not spending.”
He said more being spent on services and less on goods had spooked retailers and delayed their holiday season purchase orders – this was, he added, a blessing and curse for SME shippers.
“With MNC retailers not ordering, carriers have excess capacity and no one to take it, so SME forwarders and retailers can really take advantage of this,” Dr Kemmsies explained. “However, when the economy does not tank, MNC panic will lift and they will suddenly find themselves understocked for the peak season, and will be desperate to find space. Essentially, this will create a rush on capacity that will again price SMEs out.”
Did you subscribe to our newsletter?
It’s free! Click here to subscribe!
Source: The Loadstar
