Black Friday Gets Gloomy – Transportation Outlook Update November 2022

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Industry News & Trends

November 21, 2022

An early start means an early Peak 

Black Friday will still be an inflection point 

Looking back to see ahead  

This year’s Black Friday is going to be a gloomy one: That’s what the data tells us. Instead of the typical rush of consumer spending that lifts merchants’ balance sheets out of the red and into the black, this season is going to look very different. We have seen this pattern before, as we share below. The impact won’t just affect the merchants but the carriers as well.  

As we shared in our Q4 Transportation Outlook, the transportation market follows the U.S. economic cycle. We typically see an increase in fourth quarter freight volume starting mid-October as retailers and wholesalers ship goods in preparation for and fulfillment of Peak Season demand.  

This year, however, shippers were more proactive and shipped earlier than usual; they didn’t want to experience the supply chain disruption they faced during the COVID era. 

An early start means an early Peak 

That advance preparation has come at the expense of the typical Black Friday bump and the subsequent four-week period. The inventory that merchants ordered early is now sitting in warehouses or has already been placed on store shelves. If you walked into a big-box retailer around Halloween and wondered why Christmas decorations were already up, you have seen the problem. 

Inflation has compounded the issue. Consumers aren’t spending as much on goods this year and merchants already have overstock of outdated, unwanted or seasonal goods. This is not good news for the transportation industry that expected more freight volume. 

Just as we advised in the Outlook, shippers need to take a higher and longer view of the macroeconomic forces to see where the rest of the quarter is headed.  

Black Friday will still be an inflection point 

Most of the seasonal goods sourced overseas are in-country. They’ve already been delivered to the consignees. In many cases, they’ve already shipped to the end-customers.  

We see a slight uptick around Black Friday and the first week in December, which — based on historical data — is typically the busiest freight week of Peak Season. Not so much this year. It will still be the busiest week of Peak, but slower than normal. 

  • Not the usual Black Friday bump — There will be a boost in freight because consumers are in the habit of shopping during the post-Thanksgiving weekend. But it won’t be as much as usual. Between shopping earlier and increasing economic worries, the volume will be less than previous years. 
     
  • Going out on a flat note — After Black Friday, volume will be up slightly for 2 weeks as consumers place last minute orders. But that will be it for the year. 
     
  • Nowhere near normal — The slightly elevated volume in early December will not be enough to offset the losses from the first few weeks of the traditional Peak Season. 

The biggest unknown is the prospect of deep discounting by worried retailers post-Black Friday. Widespread sales pricing could drive freight volume in the last mile closer to normal for December. 

Looking back to see ahead 

Otherwise, in January 2023, when we look back at Peak Season as a whole, overall volume will appear flat, or even slightly negative from Q3 through EoY based on prior years’ peak trends.   

For comparison, 2015 and 2019 were comparable to our current conditions. In those years, demand declined in Peak Season relative to the nine months prior.  

  • 2015 had a -2% change in truck loadings, or -1.1m loadings* 
  • 2019 had a -0.27% change in truck loadings, or -176k loadings* 

While total incremental freight volume is up for 2022, the projected delta between the first nine months and this year’s Peak Season is more in line with those two comparable years referenced above.  

However, the macroeconomic climate in those years helped prop up freight volume. In 2022, the macroeconomic conditions are not favorable, and demand is weak. We therefore expect volume to trend flat to slightly negative from Q3 into Q4.  

Look for a summary as we close out the season. 

* Source: FTR Transportation Intelligence

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