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.

Trans-Pacific Shipping Is Such a Big Concern That Home Depot Contracted Its Own Ship

Business is booming for many, but the question is…how’s inventory and how are the stocks of key supplies looking? With major ocean shippers struggling to fully meet contract commitments and limited other available space on ocean liners, logistical challenges remain.

Home Depot – a major importer which had resorted to costly air freight to keep tool stocks up during this era of high demand and production challenges – recently announced that it has booked its own ship dedicated to carrying only its goods between China and the US. Companies without the means to take this step for its own charter have started ordering shipments for holiday season stocks earlier than usual – now or earlier, rather than August and September. However, as other companies make that move, it could lead to more delays and congestion in ports.

Even if taking the the unprecedented step of contracting a dedicated ship, retailers still face potential port congestion. It also leaves us wondering…will there be enough trucking capacity to move the goods that make it to port by the holiday season? That has been a challenge this whole pandemic era and continues to cause breaks or delays in logistics supply chains.

Companies will continue to get creative, but customers will still have to order early and be prepared for delays in delivery for at least the near term.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly in the Construction and Building Products and Consumer Goods areas, as well as Freedonia Focus titles such as Freight by Waterway: United States, Freight Services: United States, Freight by Rail: United States, and Freight by Truck: United States. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Automotive & Transport      Consumer Goods      Covid-19    

Shortage of Truckers Among Causes of Supply Chain Issues Across the US

Recently we posted on this page an article about the rising costs of so many things, from groceries and consumer goods to building materials. While there are a number of factors driving up costs, one that is seldom appreciated by the consumer is the trucker shortage – the people who drive the trucks that carry products across the US. This dearth of drivers is a key reason why store shelves are lacking inventory – in many cases, there is simply no one to take finished products to warehouses and retailers.

Indeed, while this is not a new concern, the COVID-19 pandemic has exacerbated the shortage of long-haul truckers in the US, precisely at a time when more of these professionals are needed to cope with the surge in e-commerce and deliveries of foodstuffs and other items. Key causes of the trucker shortage include:

  • low wages relative to other traditionally “blue-collar” jobs
  • long hours and frequent periods of absence from family and friends, which make it difficult for people to remain in the industry
  • frequent delays in unloading and loading trucks, which can limit the amount of time drivers can actually spend on the road – drivers are generally paid by the mile, so these delays literally cost drivers time and money
  • frustrations about a lack of safety protocols (such as access to masks and PPE) during the COVID-19 pandemic
  • the lack of younger truckers to replace older drivers retiring out of the industry
  • competition from last-mile and short-haul driving jobs that have boomed along with e-commerce and food delivery, but often require less training and definitely require more regular scheduling and/or less time away from home

With no immediate solution to this shortage of long-haul professionals on the horizon, logistics professionals will continue to look for creative solutions while manufacturers, store managers, and – ultimately – the US consumer will continue to experience higher prices and delivery delays.

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.

  Automotive & Transport      Covid-19      Services    

Acquisition Shows Continuing Consumer Interest in Boating

One unexpected benefit to the COVID-19 pandemic in the US has been that many consumers have rediscovered a love for the outdoors. People – seeking safe ways to hold gatherings with family and friends or looking to “get away” to decompress from the stresses brought on by the pandemic – have embraced a wide range of outdoor activities, from biking to camping. Fishing and water sports have also seen an increase in activity as the US’s long coastline and ample numbers of rivers and lakes provide plenty of opportunities for recreation. A recent acquisition and capacity expansion indicates that many feel that this trend will continue even as the pandemic recedes.

Recently, Wild River Marine Group, one of the nation’s suppliers of marine craft, announced that it was acquiring Hatteras Yachts, a manufacturer of motor yachts and sport fishing boats. Furthermore, as part of the deal, Wild River Marine Group will open a new manufacturing center at Hatteras Yachts’ existing production center, boosting its ability to make a wide range of marine craft.

These moves will also benefit Wild River Marine Group’s corporate parent, Bass Pro Shops – one of the nation’s leading retailer of outdoor products, including boats and fishing equipment. By expanding its production network, Bass Pro Shops will be able to offer a wider range of craft to its customers – both anglers and those simply looking to get out on the water to swim or catch some rays.

For more information and discussion of opportunities, see The Freedonia Group’s study on the topic, Recreational Boating in the US.

  Automotive & Transport      Consumer Goods      Covid-19    

Why Lots of Things We Buy Are Getting More Expensive…

The global economy is seeing shortages and historically high prices for things such as lumber, computer chips, plastic resins, corrugated board/boxes, and chicken – all products that have ripple effects into larger markets such as home construction, vehicle manufacturing, packaged goods, e-commerce shipments, and foodservice... what is going on here?

While there are often industry-specific challenges, there are several factors in common across much of the economy:

  • Shipping issues – there are shortages of containers (or containers in the wrong places), lags in unloading at ports, and shortages of commercial truckers that are slowing road transport
  • Supply constraint
    • from facility shutdowns or slowdowns, whether due to severe weather (e.g., processors of plastic resins were shut down during the February storms in Texas and still haven't caught up) or COVID outbreaks or operational restrictions (e.g., chicken processors)
    • from an inability to ramp up production any faster as some were already operating at full capacity in 2020, and while major investments are planned or underway, there are supply bottle necks at the machinery production level too
  • Demand-side issues as industries saw sales gains that were unprecedented, sudden, and even sustained

While some of these conditions existed in 2020, there were a lot of segments of the economy where we still didn’t see price increases until recently. Why not? Some retailers and manufacturers have had a sort of “decency pressure” on them…they haven't wanted to be seen as taking advantage of a pandemic so they have refrained from raising prices in some cases. However, that period is likely over. With more people vaccinated and fewer people dying, there will be less of a feeling that rising prices indicates profiteering in a crisis. Suppliers increasingly see their price increases as justified and fully in line with their rising costs.

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.

  Automotive & Transport      Chemicals      Construction & Building Products      Consumer Goods      Covid-19      Food & Beverage      Industry Studies      Machinery & Equipment      Packaging      Plastics & Other Polymers    

What Tells You Things Are Heading Back to “Normal”?

Instacart recently released a blog entry talking about something they are calling “the Pudding Pack Index.” The company suggests that increased orders of classic lunchbox items like pudding packs, granola bars, and fruit snacks are solid indicators that the US economy is returning to normalcy – a sign that kids are going to school or camps, that families are going on vacations (particularly road trips), and parents are returning to their workplace.

Our economy is full of such informal modes of evaluation. For instance, a former FEMA director suggested the “Waffle House Index” – or the ability for local Waffle House restaurants to be operating – is a good indication of the severity of storm event.

So what other core indicators might we look at now that could portend a return to normal?

  • Vaccine Rates: That’s an obvious one…vaccinated people are more comfortable resuming their previous habits and can better do so safely, even if the adjustment may not be rapid due to newly formed habits or ongoing concerns about variants or unvaccinated family members
  • Brick & Mortar Store Traffic: Now, many people are likely to retain their online shopping out of convenience and new habits, but returns to in-person shopping indicate normalization
  • Office Occupancy Rates: The return – at least partially – of workers who shifted home during the pandemic would boost traffic at foodservice restaurants and aid the sagging commercial real estate industry
  • Miles Driven: Increases here would indicate more people commuting to work and more people traveling
  • Improvements in Retail Apparel Sales: Once we decide to set aside our pandemic athleisure and start buying fresh outfits for special events, evenings out, and professional looks, we’re planning for a life away from our couches and home offices

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.

  Automotive & Transport      Construction & Building Products      Consumer Goods      Covid-19      Food & Beverage      Packaging      Services      Textiles & Nonwovens