With the traditional start to peak season in July right around the corner, there remains much uncertainty about what 2023’s version will look like.
With the combination of back to school season and a huge buildup of retail and consumer goods company inventories for Christmas shoppers, order are often placed five or six months in advance.
But inflation remains a big issue for consumers, and though it is coming down, there is concern within the logistics industry that the current interest rate policy could be killing too much demand.
“If the Fed moves forward with another couple of rate hikes notwithstanding the progress we’re seeing with disinflation and cooling inflation, that could have a real negative impact as it relates on demand,” James Gagne, CEO of 3PL SEKO Logistics, told CNBC this week.
Case in point: Home Depot saw its first quarterly earnings miss since May 2020 in its earnings report released last week, as well as seeing its biggest revenue miss since November 2002. The company cited “broad-based pressure across the business,” as well as “further softening of demand relative to our expectations, and continued uncertainty regarding consumer demand.”
Goldman Sachs CEO David Solomon recently said he expects inflation to be “stickier and more resilient” than many are thinking, given recent declines in the pace of price hikes.
Many retailers are still working off excess inventories after consumer buying behavior changed in 2020, away from apparel and home goods.
“The pig in the python has yet to go through when it relates to inventory,” Hans Hickler, president of Americas for SKO, told CNBC this week.
“If we foresee that inflation stays high and we have uncertainties, people are going to spend less and that impacts the overall absolute numbers and it’s probably going to be a lower peak season,” Tim Scharwath, CEO of DHL Global Forwarding, also told CNBC.
Scharwath noted that even if peak season disappoints in 2023, there is still a chance it can be better than 2022 - though that’s not a high bar to clear.
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 “It would be good if this year’s peak season could be a bit better than 2022 considering there was no peak last year,” Scharwath said.
The shipping numbers recently are low, logistics executives are also saying.
“We are paying attention to see if there is a situation where everyone waits until the last minute to get their products on the shelves for the holidays and that could be another challenge,” Hickler also noted. “But we don’t see that happening yet.”
Alan Baer, CEO of OL USA, told CNBC that while the market and logistics industry would welcome a return to normalcy in the supply chain, a traditional peak season may be skipped this year and not return until the third quarter of 2024.
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