Saturday, July 13, 2024

Triple threat of trade and the outlook for rest of year

The health of the consumer is the engine that drives trade and profits. To gain insight into this, you need to look at the logistics pipeline. 

How much product is moving out of warehouses, the level of inventories and current manufacturing orders are the triple threat of trade. This data set provides a forward-looking indicator on current and future consumer behavior. 

Goetz Alebrand

Goetz Alebrand, head of ocean freight for the Americas at DHL Global Forwarding, offered American Shipper his logistics outlook on what he is seeing and expectations for the rest of the year.

AMERICAN SHIPPER: What changes are you seeing in orders out of China? What kind of items are moving out?

ALEBRAND: Product continues to move away from China as importers look to balance sourcing risk. While lower cost items such as apparel and footwear had long since been able to be sourced from outside China, we are now seeing higher-value items such as electronics and appliances move as well. The winners seem to be Southeast Asian nations such as Vietnam and Thailand.

AMERICAN SHIPPER: Are you seeing any uptick in orders for air? Ocean? 

ALEBRAND: Our import customers are reporting lackluster volumes through H1 due to high inventory levels in the U.S. We are seeing some anticipated rebound in volume in July as customers write purchase orders to factories now for Q3/Q4 replenishment.

AMERICAN SHIPPER What kind of volumes and products are you seeing leaving U.S. warehouses to stores?

ALEBRAND: The automotive sector is one in which we currently see stronger volumes, as well as retail, with more and more people going back to work in offices. Capital investment goods also are trending up as certain sectors begin to invest in nearshoring and green investments (i.e. due to government policy measures in the U.S., Brazil, Canada and other markets) begin to take hold. 

AMERICAN SHIPPER: Is the consumer trading up like it was during the holidays — buying nice sneakers instead of cheap T-shirts? What’s being delivered in the last mile?

ALEBRAND: It’s hard to tell from our position as we are not in B2C as DHL Global Forwarding (at least, not in terms of last-mile delivery).

AMERICAN SHIPPER: Do you see the era of the alliances over?

ALEBRAND: We are definitely witnessing a new phase in the global carrier landscape that will reshape the alliances over the mid to long term. Right now, only very few carriers could operate alone on a global scale. So cooperation among the carriers will continue to be necessary for the foreseeable future.

AMERICAN SHIPPER: Blank sailings have not really stopped the drop in rates. Are you expecting more? How is DHL trying to navigate the shrinking capacity?

ALEBRAND: Blank sailings and slow steaming will be the levers for carriers to manage capacity according to demand. If volumes are not picking up, we expect more of those. As a quality provider, we always had and will also in future have to find the best combination of carriers and services to organize a smooth and undisrupted supply chain. We do that with the support of information, systems and data (enabled by technology) and through our experienced team of forwarders.

AMERICAN SHIPPER: Are you seeing any positive signs emerging within the flow of trade? If so, where?

ALEBRAND: Patience is key. We do not see many indications yet that would point to renewed growth in volumes. Most customers we speak to are expecting growth to kick in by the late second half of the year as businesses look to replenish their inventory after overstocking in 2022.

The post Triple threat of trade and the outlook for rest of year appeared first on FreightWaves.

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