US retailers' back-to-school pre-sales accelerate peak shipping season

Retailers Walmart, Target and Shein kicked off back-to-school sales early to prevent Amazon.com Inc.’s Prime Day event from derailing U.S. sales of backpacks and laptops, helping to bring forward the peak shipping season by two months and boost already high freight rates.

“It looks like this year, July is actually the peak of the busy season, rather than the beginning,” said Stephanie Loomis, director of ocean freight for Rhenus Logistics for the Americas.

Retailers account for about half of U.S. container import volumes. The shipping industry handles about 80% of global trade.

Cargo shipments are moving ahead of normal since late last year, when Houthi rebel attacks near the Suez Canal trade shortcut forced cargo ships to take the longer route around Africa. AP Moller-Maersk, a major Danish container shipping provider, said Wednesday that disruptions in the Red Sea have had knock-on effects beyond hard-hit Far East and European trade routes and have reached across its global network.

Nikeopen a new tab Company executives have said they imported shipments of footwear and athletic apparel into the U.S. during the March-May quarter when they had originally planned to do so in the June-August quarter. Members of the Footwear Distributors and Retailers of America, which account for 95% of U.S. footwear sales, are among the importers that have accelerated shipments, said Matt Priest, chief executive of the industry group.

Some importers have also accelerated deadlines to avoid higher costs from new tariffs on computer chips and electric vehicle batteries, or to avoid disruption during labor negotiations involving port workers on the U.S. East Coast and the Gulf of Mexico, industry experts said.

The initial surge in demand helped push the off-contract cost of shipping a standard 40-foot (12-meter) container of toys, T-shirts or car steering wheels from Shanghai to New York to nearly $10,000, double the cost in February, according to Drewry's Global Container Index.

This has fueled fears that a prolonged period of high rates could translate into further price increases for inflation-pressured American consumers.

Year-over-year U.S. container imports grew 11.9% in May and 10.4% in June, according to supply chain software provider Descartes Systems Group.

Those increases came as major retailers scheduled back-to-school sales earlier to counter demand from Amazon.open a new tab Prime Day, the biggest event in history according to the e-commerce giant, will take place on Tuesday and Wednesday. Amazon is urging its sellers to prepare inventory for the sales events at least a month in advance.

“We're now seeing fall fashion, Halloween and holiday products moving through the supply chain,” said Gene Seroka, chief executive of the nation's busiest seaport in Los Angeles.
Some of these products are already in stores. This week, Home Depot begins selling its line of outdoor Halloween décor, including “Skelly,” a 12-foot robotic skeleton.

Seroka expects robust imports in July, noting that there are 63 ships en route to the Los Angeles-Long Beach port complex, up from the usual 52 to 55.

Logistics executives are trying to avoid a repeat of the supply chain disruptions that followed former President Trump's tariffs on China, the start of the pandemic and the attacks in the Red Sea, Priest said.

“These last few years have really created, for lack of a better term, post-traumatic stress disorder (PTSD),” Priest said, referring to post-traumatic stress disorder.

The early start to peak shipping could also mean an early end to rising rates that have left some shippers fearful of a return to record container shipping prices.

“We may see a peak in demand in July and August, and some decline in demand starting in September,” said Judah Levine, head of research at Freightos, an international freight booking and payment platform.