Trucking

Cargo demand to remain strong through 2022: analyst

Demand for domestic and international transportation services is unlikely to cool significantly until late 2022, according to logistics expert Jason Miller. Photo credit: Shutterstock.com.

Many logistics companies may be concerned that last week’s US real Gross Domestic Product (GDP) data marked a second quarter of negative growth in a row. growthWhile US economic growth has undoubtedly slowed significantly from the blistering pace experienced last year, a closer look at the subcomponents of GDP shows that domestic and international transport providers are expected to see strong demand through the remainder of 2022. It has been suggested that it can be expected to be maintained at

Below are five key insights for carriers to consider.

(1) Demand for goods continues to be significantly above pre-COVID-19 levels. While seasonally and inflation-adjusted spending on commodities fell 1.1% from Q1 2022, demand for commodities remained below the estimated pre-COVID trendline for 2017-2019. It remained 4.9% above what indicated commodity demand in Q2 2022. A 16.1% increase from Q2 2019. unseasonally adjusted basis, real spending on goods increased by 6% from Q1 to Q2. This fact, combined with the slow decline in spending on seasonally adjusted commodities since its peak in Q2 2021, makes a sudden decline in demand in the second half of 2022 unlikely. It seems.

(2) real imports of commodities were flat from the first quarter on a seasonally adjusted basis; unseasonally adjusted basis), which remains 8.5% higher than the pre-COVID-19 trendline. Real imports increased by 9.2% year-on-year and 16.2% from the second quarter of 2019. Historically, a recession (as in 2021 and 2008) or a freight recession (as in 2016 and 2019) occurs when the year-on-year percent change in real imports approaches zero. So the fact that imports remain so high year-on-year is no indication that a recession is imminent.

(3) Despite much writing about excess inventories, the ratio of real nonfarm inventories to real goods spending is well below levels observed before the COVID-19 pandemic. For example, in Q2 2019 the ratio was 0.57, but in Q2 2022 it was 0.50, a difference of 11.9%. The ratio is up steadily from the 0.46 low observed in Q2 2021, but suggests a need to rebuild inventories in certain sectors such as: AutomobileAs such, it’s important not to overgeneralize the inventory problems experienced by some large general merchandise stores such as Walmart and Target.

(4) U.S. exports increased 3.7% from Q2 2022 to Q1 2022, despite the dollar’s incredible strength relative to other currencies. unseasonally adjusted basis, this increase was larger, at 5.1%. This suggests demand for American products despite the higher costs other countries pay for imports.

(5) Given the strength of the market in 2021 and the important role seasonality plays in this series, the seasonally adjusted cooldown of residential fixed investment needs to be put into context. On a seasonally adjusted basis, there was a decline of 3.7% from Q1 to Q2. No seasonal adjustment Data increased by 17.2%. This indicates that the seasonally adjusted model predicted an increase of 20.9% under typical seasonal conditions. Given this degree of seasonality, one should be careful not to read too much into this decline given that the data are corrected. Additionally, real private residential capital investment increased 11.2% from Q2 2019.

Taken together, the more detailed data underlying the GDP statistics suggest that demand for domestic and international transport services is unlikely to cool significantly as we move into the second half of 2022. Rather than falling off a cliff as one would have predicted, it looks like the freight market is headed for a phase of normalization after two years when nothing was normal.

https://www.joc.com/international-logistics/freight-demand-remain%C2%A0strong-through-2022-analyst_20220803.html Cargo demand to remain strong through 2022: analyst

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