US & Global Economic Impact Analysis and Forecasts

Freedonia analysts and economists are sharing their insights on how major events are impacting different parts of the US and global economies.

Supply Chain Alternatives: Will Rerouting to Florida Make the Difference?

The term “supply chain” was, before the COVID-19 pandemic, known to but a few Americans. However, the phrase is now on everybody’s lips as consumers confront empty shelves, rising prices, and few answers as to when the crisis will abate. One key bottleneck in the supply chain is that the California ports – such as those in Long Beach (near Los Angeles) – do not have the capacity to unload all of the ships sailing outside their harbors as quickly as they would like.

A potential solution to the problem has been floated: recommending shippers to reroute to use ports in Florida instead. While the journey would add about two weeks and cost more money for ships currently in the Pacific to reach Florida (even longer if the vessel is too large for the Panama Canal), once there, 8 of the 15 Floridian ports are able to accommodate container ships. However, only two have channel depths as deep as those on the west coast so as to accommodate the biggest container ships. Still, there are others further up eastern coast that have similar channel depths to the Ports of Long Beach, Oakland, Sea Tac Alliance, and Vancouver. 

Furthermore, some suggest that rail and truck capacity in the region is under less stress compared to the facilities in California, making it easier to find the railcars, locomotives, and tractor-trailers needed to move off-loaded cargoes to their final destination. Thus, it may be time- and cost-effective for some shippers to make the lengthy voyage from the Pacific to the Atlantic coast.

However, shipping experts suggest this is more of a long-term potential solution rather than something that is going to solve the crisis in the next few weeks or months. Shippers are already paying historically high rates for shipping containers and may balk at adding even more cost to traverse the Panama Canal. Even among those that decide the cost is worth it, few will be making that change immediately due to the need to realign other shipping plans as most containers that dock are already booked for outgoing goods at the originally intended port.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, including Freedonia Focus reports such as Freight by Waterways: United States, Freight Services: United States, and Freight by Truck: United States. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Automotive & Transport      Freedonia Focus      Industry Studies    

Packaging: One Way to Mitigate High Shipping Costs

Right-sizing and lightweighting have long been mantras of the packaging industry. However, with the sky high shipping costs and some companies’ needing to switch to costly air freight to get goods on time, it becomes even more crucial.

Currently, we’re hearing that shipping container costs have risen from about $2,000 per containers a year ago to $20,000 or more per container now. This makes right-sizing your packaging of the utmost importance so that shippers can maximize the amount of product loaded into these historically high-priced containers. Then, proper organizing of a container full of right-sized packages will look like a good game of Tetris so that the boxes are packaged in tightly, minimizing the space between each box. Shippers looking to reduce costs – and that seems like it would be just about everyone’s goal in this environment – will be looking to ensure that they aren’t shipping a lot of air!

However, shippers who have had to switch to air freight in order to get the goods they need in a more timely manner are looking even more closely at lightweighting. Air freight is traditionally more expensive than ocean freight, but is priced by weight of the shipment, not volume. Therefore, checking the gauge of the boxes used and ensuring that it is the right selection for the product being shipped is one step to economize.

Obviously, these steps must be taking with the safety of the product being shipped in mind. With the high costs of shipping and the sometimes long wait times to get replacement product, it is more important than ever to package products to minimize product damage or waste.

Freedonia analysts continue to watch these packaging evolutions, particularly as using less packaging and reducing waste have additional sustainability impacts as well.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly in the Packaging area with titles such as Global Corrugated Boxes, Global Pallets, Protective Packaging, Global Packaging & Shipping Tapes, and Global E-Commerce Packaging, and Freedonia Focus reports on Freight Services: United States and Freight by Waterway: United States. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Industry Studies      Packaging    

Ford’s Push Into Electric Vehicles Market: A Potential Gamechanger?

For many, the shift from gasoline-powered to electric-powered motor vehicles cannot happen soon enough, given their concerns about the carbon emissions generated by traditional combustion engines. However, one potential obstacle to this shift is the popularity of pickup trucks in the US. These larger vehicles – which are heavier and therefore require more energy to operate than passenger cars – are a challenge to electric vehicle designers, as batteries must have sufficient “juice” to power them.

Thus, the recent announcement by Ford that it would erect a new production facility devoted to the manufacture of electric-powered pickup trucks – as well as three battery plants (in conjunction with South Korea-based SK Innovation) – represents a tremendous commitment in bringing these vehicles to the market.

The new Tennessee-based plant – expected to begin operation by 2025 – will make electric-powered F-Series pickup trucks. As these trucks are among the most popular selling vehicles in the US, widespread sales of these vehicles would represent a significant reduction in carbon emissions – to say nothing of the shift in truck buyers’ preferences.

Indeed, with early sales reports indicating some promise there (with 150,000 nonbinding sales reservations since May), Ford may feel that truck buyers are more than ready to adopt electric technologies to power their vehicles.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research. Freedonia Custom Research is also available for questions requiring tailored market intelligence.



Home Depot Looks to Bring Same-Day Delivery to Home Improvement Market

For many homeowners considering a DIY home improvement project, a trip to the local big-box retailer was traditionally an integral part of the job – whether it was to window shop, visualize the new kitchen or bathroom, or to select and buy the materials needed for the project.

However, the COVID-19 pandemic has altered many of these traditional patterns:

  • Consumers were leery of entering retail stores and thus began shopping online (as of the August-September 2021 edition of The Freedonia Group National Online Consumer Survey, 51% of respondents indicated that they decreased their frequency of browsing in stores and 31% indicated they were still limiting time spent in physical stores because of the coronavirus pandemic).
  • Homeowners increasingly undertook non-traditional projects – such as converting a spare room into a home office – and thus needed a wider range of materials to complete a project.
  • Ongoing shortages of building materials (such as lumber, fasteners, and plastic building products) meant that even if consumers did enter a store, they were frustrated by an inability to purchase the products they needed.

The home improvement industry has looked for ways to continue to reach customers, with firms adding lockers for storing purchased goods for future pickup by a consumer or expanding delivery options (so that products are unloaded when fewer people are at a job site). However, most of these services were directed to construction professionals and not the DIY consumer.

Recently, though, Home Depot announced a new program to enhance shopping for the DIYer. The company will partner with Wal-Mart’s Walmart GoLocal delivery business to provide same- and next-day shipping to both DIYers and construction professionals. Consumers can order the full range of Home Depot’s product line – from lumber to lighting, paint to plumbing products – from the comfort of their homes and offices and have them delivered – at a desired time – to a place of their choosing. Indeed, for many DIYers, this is a godsend, as the delays caused by the return trip to the store will be eliminated (hopefully!)

As e-commerce becomes more entrenched in the US economy, it is not surprising that companies will expand their delivery offerings to maintain – if not expand – sales.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Consumer Goods      Industry Studies