Holiday Supply Chain Insights

Supply chains are poised to manage this year’s holiday season well, primarily due to lower overall demand, which is driving available capacity to deliver.

Thus far, our traditional seasonal spikes in international and trucking freight costs have been relatively mild compared to prior years. Global and domestic freight is down, giving plenty of capacity for freight to move without huge delays or price increases.

Barring any major weather events, this year’s supply chain should be relatively smooth sailing. As sales begin and the holiday season gets closer, there will likely be spikes in demand for parcel and final mile deliveries due to the growth in e-commerce. Final mile and warehousing are at the greatest risk of delays, primarily due to labor. 

However, it should be mostly manageable with limited delays. Shippers will be testing technologies such as AI this holiday season to work on forecasting and optimization of their networks. Expect this year’s results to be a key driver in implementation going into 2024.

Impact on Consumer Spending

Consumer spending is expected to rise; however, it will be in line with inflation rates. This means that while consumers are spending more, less product is actually going out the door. Consumer spending is also being impacted by the reinstatement of federal student loan payments.

Consumers are focused on necessities along with travel and experiences this holiday season. Items deemed necessities, meaning apparel and household goods, are projected to see an increase in demand.

Interest rates are likely another topic to keep tabs on, as they will likely have an impact on holiday vehicle purchases and incentives provided by dealerships. Consumers should expect to see shipping and pick-up options vary by retailer. As retailers work to control shipping costs, they could incentivize consumers to consolidate products into one shipment through delayed shipping or offer local pickup incentives.