US retailer holiday orders should boost transport demand, but risks loom



<html xmlns="http://www.w3.org/1999/xhtml"><head><title>ANALYSIS-US retailer holiday orders should boost transport demand, but risks loom</title></head><body>

By Lisa Baertlein

LOS ANGELES, May 24 (Reuters) -The slumping U.S. transportation sector could be bouncing off a bottom as retailers start preparing for the back-to-school season and winter holidays, but political brinkmanship in Washington and interest rate hikes could threaten long-term consumer demand, economists and supply chain executives said.

Retailers like Walmart WMT.N and Target TGT.N have largely tackled bloated unsold inventories and are taking steps to restock, transportation executives said. That activity is being closely monitored because consumer spending accounts for more than two-thirds of U.S. economic activity and fuels significant transportation demand.

Ships, planes, trucks and railroads that move goods sold by retailers enjoyed a boomearly in the COVID-19pandemic as people sheltered at home.

But much of that demand evaporated when restrictions lifted and consumers resumed travel and indoor dining last spring. Retailers, stuck with too much merchandise, stopped ordering - sending transportation rates swooning and leaving providers with too much capacity.

Some say that downward trend could start to reverse in 2023 for transporters.

Retailershave already placed holiday orders this year,said Jack Kleinhenz, chief economist for the National Retail Federation (NRF) industry group.

Wholesalers and retailers are "continuing to be very conservative with inventory," said Greg Javor, senior vice president of global supply chain operations for Mattel MAT.O, seller of Barbie dolls and Hot Wheels toy cars.

"We expect things to be normal ... in the second half of the year with the inventory corrections pretty much behind us," Javor said at the Reuters Events supply chain conference in Chicago last week.

Retail orders are filled by factories and then shipped to buyers, creating a time lag of weeks to months. The typical peak season for container imports is in the autumn, due to holiday orders, but has occurred earlier during the pandemic.

Even so, U.S. imports already have returned to pre-pandemic levels, bolstering hopes for a transportation uptick in the second half of 2023.

"The biggest piece that we're watching right now is, 'What is going to happen with consumer demand and how does that end up?'," said Drew Wilkerson, CEO of freight brokerage RXO RXO.N.


WORRIES REMAIN

Indeed, glimmers of good news are tempered by ongoing worries about a standoff over raising the federal government's borrowing cap and the U.S. Federal Reserve's efforts to tamp down inflation with interest rate hikes.

U.S. consumer sentiment slumped to a six-month low earlier this month. And Federal Reserve officials have signaled they expect interest rates to stay high or go higher, given sticky inflation - dashing investor hopes for a rate cut.

"The problem is that the longer higher inflation sticks around, the longer people expect it to remain," NRF's Kleinhenz said.

The American Association of Port Authorities (AAPA) earlier this month called out demand risks in general retail merchandise and household durable goods, which account for more than half of U.S. ocean imports.

While general merchandise stores are unlikely to be aggressive about ordering, the real estate sector that brings in appliances, furniture, tiling, floor covers and other goods for new homes is being pummeled by rising interest rates, AAPA said.

Still,DHL Express Americas DPWGn.DE CEO Mike Parra is betting U.S. consumers will remain resilient and he feels "optimistic" about year-end activity.

Still, Parra will be watching retail restocking in August, September and October. "That is the indicator for me as to what's going to happen in quarter four," Parra said.


US import volumes back to pre-pandemic pace US import volumes back to pre-pandemic pace https://tmsnrt.rs/3pFLRxo


Reporting by Lisa Baertlein in Los Angeles, editing by Deepa Babington

</body></html>

Ansvarsfriskrivning: XM Group-enheter tillhandahåller sin tjänst enbart för exekvering och tillgången till vår onlinehandelsplattform, som innebär att en person kan se och/eller använda tillgängligt innehåll på eller via webbplatsen, påverkar eller utökar inte detta, vilket inte heller varit avsikten. Denna tillgång och användning omfattas alltid av i) villkor, ii) riskvarningar och iii) fullständig ansvarsfriskrivning. Detta innehåll tillhandahålls därför uteslutande som allmän information. Var framför allt medveten om att innehållet på vår onlinehandelsplattform varken utgör en uppmaning eller ett erbjudande om att ingå några transaktioner på de finansiella marknaderna. Handel på alla finansiella marknader involverar en betydande risk för ditt kapital.

Allt material som publiceras på denna sida är enbart avsett för utbildnings- eller informationssyften och innehåller inte – och ska inte heller anses innehålla – rådgivning och rekommendationer om finansiella frågor, investeringsskatt eller handel, dokumentation av våra handelskurser eller ett erbjudande om, eller en uppmaning till, en transaktion i finansiella instrument eller oönskade finansiella erbjudanden som är riktade till dig.

Tredjepartsinnehåll, liksom innehåll framtaget av XM såsom synpunkter, nyheter, forskningsrön, analyser, kurser, andra uppgifter eller länkar till tredjepartssajter som återfinns på denna webbplats, tillhandahålls i befintligt skick, som allmän marknadskommentar, och utgör ingen investeringsrådgivning. I den mån som något innehåll tolkas som investeringsforskning måste det noteras och accepteras att innehållet varken har varit avsett som oberoende investeringsforskning eller har utarbetats i enlighet med de rättsliga kraven för att främja ett sådant syfte, och därför är att betrakta som marknadskommunikation enligt tillämpliga lagar och föreskrifter. Se till så att du har läst och förstått vårt meddelande om icke-oberoende investeringsforskning och riskvarning om ovannämnda information, som finns här.

Vi använder cookies för att ge dig den bästa upplevelsen på vår webbplats. Läs mer eller ändra dina cookie-inställningar.

Riskvarning: Ditt kapital riskeras. Hävstångsprodukter passar kanske inte alla. Se vår riskinformation.