The jury is still out on Peak Season

As an editor in what is truly a multi-faceted industry, I look at myriad news sources to get information on the things I cover.

These sources vary, but to a large degree they are comprised of newspapers, wire sources, academic journals, and company reports, among others. But one source that is particularly helpful is analyst reports by Wall Street firms tracking the freight transportation and logistics sectors.

While I am not the direct target audience for these reports, I find that they are highly effective in helping me keep up with the industry. And that leads me to my actual point. A Morgan Stanley report I recently received suggests what many have been suspecting for a while: some freight activity appears to be slowing down, no matter how you dice it.

Look at this passage from Morgan Stanley’s Truckload Freight Index:

“After showing signs of normal peak season trends for several weeks, our dry-van index showed a deceleration over the past two weeks. Regionally, the Midwest and Northeast are seeing the greatest deceleration.”

Now, if your initial reaction to that is “Big deal,” I get that. But, wait, there’s more:

“On a seasonally adjusted basis, our dry van demand index is showing a sequential decline. There is a chance this may be an extended post-Labor Day payback, but [it could signal] a weaker-than-expected peak season.”

A weaker-than-expected Peak Season may be in the making, according to this report. But we won’t likely know if that is 100 percent true until freight data through October is complete. If it is true, it is sure to be disappointing as many said and reported (yes, me) that there really would be a Peak Season in 2010.

It is not like there are not good things going on. Look no further than the most recent import volumes from the Ports of Los Angeles and Long Beach. Simply put, they are up…a lot. But why are we seeing this Morgan Stanley report of a sequential decline then?

Actually, I did not mean to ask that question, as I am neither an economist nor a logistician. At any rate, it would be great to be writing a story in November about how great the October Peak was. Maybe this is just a lull and that story will actually happen, who knows?

It could be wishful thinking at the end of the day, but that still remains to be seen. What are you seeing in the market these days in terms of Peak Season-related activity? Were our initial hopes driven by the inventory re-build we saw happening in the first half of the year?

It is clear retailers are standing pat with what they have until they need more. And that makes sense, considering they don’t want to be caught with extra stock like in January 2009, when simply abysmal became rather dire for many. But consumer spending appears to be staying at constrained levels with no real indication it is going to pick up, especially on the heels of a very (or perhaps slightly below average) Back-to-School Season.

That leads to the next point of whether the so-called economic recovery is, in fact, a consumer-led one (which may not be the case) or a manufacturing-led one (which may be the case. But that is another blog for another time.