US demand for goods continues to grow

Source: Lloyd’s Loading List
Date: 9th November 2021

US retail consumption growth is continuing despite a resumption of spending on services and a change in the nature of goods being purchased.

A survey of the latest US Bureau of Economic Analysis figures by Sea-Intelligence shows a 25% jump in total personal consumption in the year to September.

Much of that growth is accounted for in a reversal of consumption growth back to its pre-pandemic levels following a short, sharp contraction last year.

But when that spending is broken out into goods and services, the two-year average growth rate for goods in September was over 5%, while services remained flat, despite a significant recovery since the middle of 2020.

“It would therefore appear that personal spending on goods remains on an accelerated growth trend, albeit it has come down somewhat from an extraordinary peak,” said Sea-Intelligence chief executive.

There has also been a change in the nature of goods being purchased. Spending on durable goods peaked in early 2021 but the growth rate has since declined, whereas non-durable goods continue to show a gradual upward trend.

Sales of big-ticket items such as furniture and furnishings were declining, while spending on smaller appliances continued to increase.

“It appears that this development can be seen as a consequence of the supply chain crunch, where smaller appliances are favoured, as the retail value moved inside a container is larger for small appliances.”

“Hence these are goods more likely to be prioritised by the shippers.”

In total, however, there were no signs that the consumer boom was abating.

“While there was some element of decline in the growth rate, this was to a large degree driven by motor vehicles and not by typically containerised consumer commodities.”

“There is a trend of shifting from durable to non-durable goods though, but that does not materially alter the boom in container volumes either.”

“This means we should not expect a decline in demand to rescue the congestion and bottleneck situation, in the short to medium term.”

For shippers, consumer behaviour does not point to any short-term reversal back to normality. It might therefore be more apt to simply describe the current situation as a ‘temporary normal’.

This implied that all market stakeholders should make “robust plans” for 2022, taking the current situation as a baseline to be managed and not a situation to be avoided. Even worse would be to expect a return to prior conditions any time soon.

This is of course difficult for shippers who have built their business models around stable and predictable supply chains, and even more difficult for those who in addition to stability and predictability, is also relying on low-cost transportation.

There is scant consolation for such shippers in the above message, however that is nonetheless the reality they need to plan for.

NEOLink cooperated with our order processing system. He did not replace it or force solutions. Logfret did it better than other companies on the market – it adapted its system to ours. Logfret didn’t come to us saying, “We have this solution, and you either use it or we won’t cooperate.

Procurement Director

Pumps Manufacturer

We made a huge improvement in global visibility with a global platform—anyone can log into NEOLink and look at a shipment anytime, anywhere in the world. We wanted a freight forwarder with a good technology platform, which could handle the complexities of our business and we found NEOLink!

A global leader in performance materials and specialty chemicals

My suppliers have less or zero experience with international logistics. Thus, not able to create proper documentation which leads to tremendous delay. Thanks to Logfret who provide training to all suppliers and work with us to build up a consolidation hub to reduce transportation costs significantly.

One of the world’s leading designers, manufacturers and distributors of ride control products