Retailers’ Early US back-to-school Sales Hasten Peak Shipping Season and Shipping Rates Surge

The Launch of U.S. back-to-school Promotions Spurs?a Premature Surge in the Shipping Season

In a bid to rival Amazon's Prime Day, U.S. retailers have moved up their back-to-school promotions. Their stockpiling demands have facilitated an early surge in container shipping volume and a subsequent hike in shipping rates as these retailers represent approximately half of the U.S. container import market.

According to Reuters, with over a month until schools reopen, major retailers like Walmart (WMT.US) and Target (TGT.US) have started their back-to-school sales early to stop Amazon.com's Prime Day event held on July 16-17 from siphoning U.S. sales. This early stockpiling has brought the peak shipping season forward by two months this year, starting July instead of the usual September.

Nike, a leading sportswear brand, has also adjusted its inventory replenishment schedule in response to the early start of the back-to-school shopping season. Originally planned for June to August, the restocking has been moved up to March to May. Additionally, industry experts observe that escalating tariffs on Chinese semiconductors and EV batteries, effective from August 1st , have contributed to a surge in pre-tariff orders from U.S. companies.

As the momentum for cargo pickup intensifies, the freight rate for shipping a 40-foot container from Shanghai to the U.S. East Coast has soared to nearly $10,000, more than double the rate in February.

The Suez Canal Blockage and the Early Halloween Season Prompted Early Shipments

Since late last year, transportation times have been longer than usual due to disruptions. Ships are forced to take longer routes around Africa as the Houthis have been attacking trade routes near the Suez Canal since December. Worse still, the Red Sea disruption has extended from the heavily impacted Far East and Europe trade routes to the entire global network.

In May, U.S. container imports increased by 11.9% year-over-year, followed by a 10.4% rise in June. These increases are attributed to major retailers scheduling back-to-school sales early to compete with Amazon's Prime Day, the largest ever event of its kind. In response to it, Amazon required its sellers to complete inventory for the sale at least a month in advance.

“We're now seeing the flow of autumn fashionable products, Halloween holiday season goods in the supply chain,” remarked Gene Seroka, the Executive Director of the Port of Los Angeles, the most active port in the country. He forecasts a strong influx of imports for the month of July evidenced by the fact that 63 ships are on their way to the Los Angeles and Long Beach port complex, which is more than the usual 52 to 55.