Welcome to the September edition of the Motive Monthly Economic Report. What follows is an analysis of the major trends in the supply chain and economy across the Motive platform of 120,000 customers during the past month. Motive plays a crucial role supporting the businesses that operate in the middle of the supply chain and economy. By tracking the volume of goods moving into distribution centers and crossing borders, Motive has a clear view of the flow of inventory before it reaches stores. Our unique insights into what’s happening between consumer spending and the movement of goods serve as a leading indicator of consumer demand, retail inventory changes, and other market trends before they fully materialize. Keep reading for a front-seat view into key factors currently influencing the U.S. economy.

Motive Predictions:

  • Strikes at U.S. ports could create major supply chain issues for North America, including higher consumer prices and regional price spiking 
  • Recent surges in retailers’ inventories could mitigate potential port strikes’ impact and protect 2024 holiday sales 
  • Consumers will do more in-person shopping this holiday season, with brick-and-mortar seeing highest increases in sales volumes
  • Trucks’ warehouse visits will continue to climb in the next two months, peaking in November as retailers prepare for holiday shopping
  • The outcome of the 2024 presidential election will have little impact on the trucking industry in the near-term; increased tariffs would impact ocean freight more than ground

Top Findings:

  • Import volumes at two major U.S. ports, Port of L.A. and Laredo, are set to surpass peak pandemic levels
  • Port of L.A., the largest seaport in the U.S. saw 60% year-over-year growth in imports in July
  • Trade with Mexico drove a 24% rise in imports in August by commercial vehicles through one of the nation’s busiest international trade ports in Laredo, Texas
  • Macro-uncertainty, including potential strikes, has influenced retailers’ inventory plans, prompting a three month inventory surge across sectors
  • Truck visits to grocery and superstore warehouses saw four-year highs
  • Warehouse visits and strong brick-and-mortar performance show retailers anticipate strong consumer spending this holiday season
  • Transportation and logistics leaders are assessing how election outcomes will impact the freight industry and global supply chain 
  • Trucking market sees positive growth for second month in a row as it continues positive trajectory

Record-high imports indicate retailers are preparing for strong Q4 consumer demand and potential strikes at U.S. ports

Data from two major U.S. ports reveal retailers anticipate strong consumer demand in Q4 and are preparing for a record holiday season. The Port of Los Angeles, the largest seaport in the U.S., saw 60% year-over-year growth in imports in July, moving toward levels last seen when consumer demand peaked during the pandemic in 2021. In addition, our data shows that imports by commercial vehicles through the land port in Laredo, Texas on the U.S./Mexico border, which is the nation’s largest port by trade value, jumped 24.4% year-over-year in August. This marks the highest level of imports at the Laredo border crossing in four years and is further evidence of nearshoring’s impact on U.S. trade dynamics. 

The surge in imports may also indicate retailers are preparing for major supply chain disruptions as potential port strikes loom. If an agreement between the International Longshoremen Association (ILA) and port owners is not reached by the October 1 deadline, labor halts could have major impacts across the U.S. economy. The ILA handles 43% of all U.S. imports and $3.7 billion dollars in monthly trade that moves through ports on the East Coast and in the Gulf of Mexico. Strikes at these ports could force businesses across retail, manufacturing, agriculture, logistics, and other major sectors to scramble as they try to mitigate huge financial and job losses. For consumers, this disruption could mean product shortages, delays in last-mile shipping, and significant pricing impacts. The concentration of their supply chains to fewer ports could cause regional price spikes, with eastern and southeastern regions facing the highest prices. Consumers could see increased prices across the board as sellers pass on skyrocketing shipping costs.

Retailers’ robust inventories could help mitigate some of the short-term fallout from the strikes. In the last three months we have seen retailers bring in inventory earlier than previous years, driven both by strong consumer demand and macro-uncertainty around issues like these labor negotiations. The high levels of inventory restocking could help sellers meet consumer demand this holiday season as many products set to be sold in Q4 are already arriving at U.S. warehouses. Another reason retailers may be well positioned to withstand the near-term impacts of port strikes is that they are used to adopting nimble approaches in response to market volatility. Supply chain disruptions have become the norm the last four or more years, and survival has required fast re-strategizing.

Our take: While the port strikes could significantly disrupt the supply chain and cause higher consumer prices in 2025, we don’t think strikes would significantly impact Q4 consumer spending and holiday shopping.

Retailers stock up in anticipation of strong Q4 consumer demand with brick-and-mortar poised to see biggest gains

The summer retailer restocking momentum continued in August, according to Motive’s Big Box Retail Index, which tracks truck visits to warehouses of the top 50 U.S. retailers. Truck visits were close to July numbers with an index score of 80.1, representing a 7.7% year-over-year increase. Several sectors set record highs for warehouse visits; grocery and superstore retailers rose 14% year-over-year to the highest level we’ve seen for late-August in the last four years, and department store and apparel retailers jumped 27.1% year-over-year. Inventory-to-sales ratios, or the amount of stock retailers are holding in relation to their sales volume, rose to 1.29 from 1.27. We expect this to continue to climb as retailers continue restocking inventory ahead of the holiday season and potential port strikes. 

Brick-and-mortar heavy industries, including apparel, department stores, grocery, and superstores, saw the highest levels of restocking. These increases signal sellers anticipate heavy in-store traffic this holiday season and have high confidence in consumer spending in Q4. We predict sales in brick-and-mortar industries will continue to rise through the rest of 2024.

Our take: While retailers have been restocking inventories at higher levels year-over-year since March, we predict the highest surge of 2024 will begin in the last week of September and peak in November as retailers prepare for the holiday shopping, which can account for up to 30-50% of yearly sales. We anticipate stronger holiday sales this year compared to last with apparel, grocery, and superstore sectors seeing the highest holiday increases in sales volumes.

Retail Index – Discount Retailers & Wholesalers

Retail Index – Grocery and Superstores

Retail Index – Home Improvement

Retail Index- Department Stores, Apparel & Electronics

Retail Inventories / Sales Ratio : General Merchandise Stores

Source: Fred

Trucking market continues positive growth; leaders assess potential 2024 election impacts

In August, new carrier registrations in the trucking market rose for the second consecutive month, climbing 4.3% since July. This marks an 11.6% decrease compared to 2023 and a 37% increase since 2019. Carriers exiting the market rose marginally in August: 1,153 compared to 915 in July. While this represents a 26% month-to-month increase, it marks a 52% decline year-over-year. While both metrics regressed slightly in August, the trucking market continues to move toward profitability as rates and consumer demand remain elevated. 

Speculation around the potential impacts of the 2024 presidential election is spurring some concern across transportation and supply chain leaders. The government’s future investment in infrastructure, including expansion of passenger rail between cities, investments in bridges, and even high-speed internet, could impact the transportation industry. Clean fleet regulations and different electric vehicle legislation are also being discussed, with speculation that a Harris administration would continue with the Biden administration’s policies calling for increased funding for electric charging stations and reducing greenhouse gasses.

Tariffs imposed by either administration could be some of the most impactful legislation for transportation. The 10% increase on goods from China proposed by Trump would dramatically affect the importing and sale of goods, especially from Eastern Asia. If in effect, increased tariffs on Chinese goods would cause import volumes to immediately spike as retailers attempt to fast-track cargo before the tariffs are in effect. Such an import rush this fall could trigger high prices for consumers. Given Chinese imports travel primarily by ocean freight, impacts to ocean freight to be more dramatic than trucking. Both administrations are likely to consider tariff policies that have the U.S. leaning less and less on China, and we expect American businesses to continue to rely on Mexico as a key importer.

Our take: Regardless of which new tariff policies go into effect, we expect Mexico’s powerful position in the global supply chain, as well as nearshoring, to continue to grow. We don’t believe the outcome of the presidential election will significantly impact the trucking industry in the short term and we predict the market will continue its current trajectory as we move into 2025.

As ACT research president Kenny Vieth recently noted, “The beauty of this industry is that the U.S. economy is entirely dependent on trucks and truck transportation. And regardless of who gets elected, we’re still going to be eating and drinking and buying clothes and cars and houses the day after the election. We are, as a group, in a very good industry. It’s like death, taxes, and distribution.”

Summary

This month, high import volumes at the Port of Los Angeles, up 60% year-over-year in July, and the land port in Laredo, Texas, up 24% in August, revealed retailers are preparing for a strong fourth quarter and holiday shopping cycle. The inventory surge may also be prompted by macro-level uncertainty as concerns over potential port strikes and increased tariffs grow. Four-year highs in truck visits for sectors including grocery and superstore, as well as apparel, department stores, and electronics, signal high confidence in consumer spending and brick-and-mortar sales this holiday season and we could see more in-person shopping this season than in years past. Finally, the trucking market’s overall momentum continues and we expect the positive performance to continue, regardless of the outcome of the 2024 election.

Data Methodology

The Motive Monthly Economic Report uses aggregated and anonymized insights from the Motive network and publicly available government data from the Federal Motor Carrier Safety Administration, U.S. Census, and U.S. Department of Transportation.