LM reader survey highlights mixed views for the 2023 Peak Season

While there is a sense that the impacts of the pandemic on supply chain, freight, transportation, and logistics operations are seeing some easing, there are a whole host of ongoing issues and challenges for industry stakeholders to watch and monitor.

That sentiment rings especially true, as it relates to things like lower rates and excess capacity across various modes, coupled with still-high—but declining—inflation and inventory levels, as well as with an ongoing shift from goods spending to increased spending on services-based activities by consumers. And these things, among others, are things to keep an eye on, as we approach the 2023 Peak Season, based on the findings of a recently-conducted Logistics Management reader survey of more than 100 freight transportation, logistics, and supply chain stakeholders.

As for how the 2023 Peak Season may look compared to a year ago, the survey’s findings could be viewed as equitable, with 35% saying it will be more active, another 35% saying it will be less active, and the remaining 30% indicating things will be the same as last year.  

For those survey respondents indicating that Peak Season activity will be down compared to a year ago, a shipper respondent put things clearly, observing that freight volume is down, capacity for freight up, and freight rates are depressed.

Inventory also remains a major factor, as noted by another respondent.

“It feels like less volume is moving overall as companies are still working through excess inventory and watching costs,” he added.

Looking at the impact of Peak Season on day-to-day operations, 41% of respondents labeled it as very significant, with another 46% calling it somewhat significant, and the remaining 13% considering it not very significant.

But when asked if Peak Season impacts day-to-day operations, the findings were more one-sided, with 77% saying it does, and the remaining 23% saying it does not.

Reasons cited for those saying Peak Season impacts daily operations, included: higher volumes and typically tighter capacity (which is not the case, for the latter, this year); staffing levels; fleet readiness; shifts in production plants; and increased use of assets, among others.

Chris Rogers, Head of Supply Chain Research for S&P Global Market Intelligence, told LM that he expects the 2023 Peak Season to have more of a pre-pandemic feel and more closely resemble the 2016-to-2019 period than the 2020-to-2022 period.  

“The shape of the seasonality looks more normal, and the level of shipping is down from the ‘fever peaks’ that there were, and we also don’t have the ‘jam-ups,’ with the exception of Canada, of ships waiting to be unloaded that we had in the past,” he said. “There are always some caveats, but I don’t think the labor risk will be there, at least at the ports, even though there may be labor issues inland. The current issues at the Panama Canal are a concern, in terms of whether that causes some problems shipping into the East Coast later into Peak Season.”  

Even though a fair amount of economic uncertainty remains, there are some positive indications that there is the potential for a decent peak season over the back half of the year, according to Jared Weisfeld, Chief Strategy Officer, for Charlotte-based RXO, the fourth-largest full truckload broker in the United States, and an asset-light transportation services provider. 

“We saw retail e-commerce volumes, declining at a lesser rate in Q1 relative to Q4, which speaks to the better inventory positions, in terms of days of inventory on behalf of a lot of our key customers,” he said. “I think that's very encouraging, but I think it also needs to be balanced. We're dealing with a tough macroeconomic environment, with tighter credit conditions that potentially could impact the consumer. There are also rising interest rates that continue. The potential holds, and I think we're seeing a lot of those indicators, which would suggest the potential for a peak season, but I think one key assumption is consumer demand needs to hold on.”

Darren Field, EVP and President, Intermodal, for J.B. Hunt Transport Services Inc., observed on the company’s second quarter earnings call that it remains to be determined if there will be a true 2023 Peak Season, saying the company is not making predictions around that, saying it will wait and see how things play out, adding much of it is contingent on how its customers fare, in terms of sales, as well as demand.

When asked about 2023 Peak Season prospects, Port of Long Beach Executive Director Mario Cordero said that in a typical year, things start to get moving in July and August. But he said that, for this year, September is more likely to be the month that numbers start to increase.

“The first half of 2023 has seen double-digit volume losses,” he said. “When I say that we are going to move towards a plateau, it is really that we moving away from that negative double-digit volume loss to what, in my mind, is sort of a more normal volume that moves through the Port of Long Beach and the San Pedro Bay complex. Look to September of this year as a high number for us that brings us back into some reaffirmation of the normal movement of cargo volume here at the port.”