Strong retail sales over Thanksgiving weekend led to a 16% increase year-over-year for that period -- a 4.5% gain for the month of November as a whole -- which boosted trucking company results, too.
Two months ago, analysts predicted that shoppers would hold back due to financial woes. At TransCore, we disagreed, citing our spot market data to show that while holiday freight had been delayed, both the amount and the rates would surpass last year’s figures. The delay in seasonal freight was due to several factors, and it had far-reaching effects. Those are outlined below, along with other key facts about the 2011 holiday freight season:
Seasonal shift. Shippers (and analysts) seemed uncertain about the holiday season forecast, right up to the last minute. Imports were slow in September but spot market freight volume and rates picked up steam in key ports in mid-October, indicating a delay in shipment rather than a cancellation. (Source: TransCore Trendlines.)
Supply chain. In mid-November, rail intermodal traffic surged 4.7% and rail growth was expected to continue through late December, as FedEx followed UPS onto freight trains in an attempt to reduce costs on seasonal shipments. Trucking companies will benefit from the additional traffic, as well, with shorter hauls, LTL and parcel ascending as the Christmas shipping deadline looms. (Source: Business Week)
Gift card amounts are expected to increase by an average of 6.7% year-over-year. Gift cards are on the wish list for 80% of consumers surveyed by the National Retail Federation. The cards are often redeemed well into January, effectively delaying and extending the holiday shopping season. (Source: Wall Street Journal)
Retail success. Brick-and-mortar and online stores that took a wait-and-see attitude were rewarded by Thanksgiving sales that beat expectations, and they may be rushing to replenish inventories before the season ends. (Source: Forbes)
Reefer rates rose leading up to Thanksgiving, followed by a lull. Rates may surge again in the week before Christmas. (Source: TransCore Truckload Rate Index)
Christmas tree farms nationwide report sales increases of 5% to 10% in the first two weekends after Thanksgiving. (Source: National Christmas Tree Association)
Retail: The National Retail Federation upped its holiday sales forecast today to 3.8% growth, which would add up to a record $469 billion in spending through November and December. Previously, NRF had predicted a more modest increase of 2.8% year over year. The new, more optimistic forecast does not match last year's 5.2% increase over recession-plagued 2009, but it beats the 10-year average of 2.6% year-over-year growth in holiday spending, according to an Associated Press report in the Washington Post.
Trucking: Holiday freight volume and rates, plus an informal survey of large carriers, led to a bullish prediction for key trucking stocks in fourth quarter. (Source: Stephens, Inc.)
Illustrations by Eric Savage of Savage Creative