5 mins

Shipping Insights for the 2023 Holiday Season

Peyton Jack


Peyton Jack
October 19, 2023


As the 2023 holiday season approaches, shippers are faced with a unique set of challenges. Credit card delinquency rates, low personal savings rates, and the resumption of student loan payments are looming factors that could reduce holiday demand. Meanwhile, shippers are depleting last year’s inventory and trying to accurately forecast if consumers will show up. However, there remains a possibility that consumers might defy expectations, maintaining their current spending patterns. As the holiday demand takes shape, mutually beneficial partnerships, actionable data, and maximizing transportation technologies will be essential to generating favorable earnings reports.

A Year of Comparisons: How Does This Year’s Shipper Holiday Demand Stack Up Against the Others?

The ever-changing freight market has created significant shifts in linehaul rates. In 2021, linehaul rates skyrocketed due to the urgent need to transport goods to market, with service and capacity being crucial network priorities. In 2022, the transportation sector witnessed a notable shift. Demand declined, which subsequently led to an increase in available capacity within the market. For shippers grappling with stagnant or declining revenues, cost ascended to the forefront of their concerns. Enter 2023, consumer demand declined and linehaul rates reached their floor, shippers are now prioritizing a new combination of cost, capacity, service, and sustainability in their decisions. How shippers prioritize these factors determines which carriers a shipper will partner with to establish a mutually beneficial relationship. Given that market conditions are largely expected to normalize in 2024, it will be an ideal time to maximize the potential of these partnerships.

Rising credit card delinquency rates, low personal savings rates, and the resumption of student loan payments, however, could impact holiday demand for shippers. Since bottoming in Q3 2021, credit card delinquency rates have experienced a steady rise, reaching 2.77% by Q2 2023 and slightly exceeding the 2019 average. The trajectory for Q3 remains uncertain, with the potential for delinquencies to further exceed pre-pandemic levels. Personal savings sit at a mere 3.9% as of August, dropping from 5.3% in May, 4.9% in June, and 4.1% in July. These figures are significantly lower than the pre-pandemic range of 7 to 9%. The resumption of student loan payments could also reduce holiday demand with consumers allocating funds from their holiday shopping budgets towards paying their loans.

What indicators can we trust this holiday season?

As shippers adopt a wait and see approach, we can look at freight demand indicators and capacity ratio trends to form an educated analysis of what to expect for shipper holiday demand. Looking to the Breakthrough ecosystem of data, comprised of more than $25 billion in annual transportation spend, total shipments experienced a 6.9% decrease compared to last year, but saw an 11.8% increase in August from July levels.

Zooming out to external data sources, the U.S. Census Bureau reveals that total retail sales grew by 2% year-over-year in August. However, after adjusting for inflation and excluding gasoline purchases, retail sales actually fell by 1% in August. This decline likely resulted from weak consumer demand in the presence of a variety of challenging macroeconomic conditions.

On the capacity side, larger fleets are either maintaining or growing their driver counts, while smaller carriers are exiting the industry due to the lack of freight demand. However, employment levels for long-distance truckload transportation are also up nearly 10% from 2021 levels. Most of this growth can be attributed to owner-operators and drivers from extremely small fleets moving to larger fleets.

Although there is optimism in terms of real wage gains and growth in disposable incomes, until these gains translate into actual retail sales growth, freight demand will largely stay consistent. However, a potential boost may come from strong holiday spending and retailers replenishing their inventories, fostering renewed consumer confidence and driving freight volumes upward. As we approach peak shipping season, retail shipments could surge. The 2023 holiday season holds numerous possibilities as the freight market evolves.

Navigating the Challenges and Seizing Opportunities This Holiday Season

As we approach the 2023 holiday season, shippers face a unique set of challenges and opportunities in the transportation industry. To navigate Q4 with confidence and seize opportunities, consider these three key strategies.

  1. Identify and strengthen carrier partnerships for the long term. With uncertainty ahead, an agile supply chain backed by reliable partnerships is crucial.

  2. Find a trusted advisor who can provide an unbiased view of the freight market. In the complex transportation sector, it is crucial to seek guidance from transparent sources that consider a comprehensive view of the market.

  3. Maximize the value of technology. By leveraging both existing tools and exploring new innovative solutions, you can uncover a wealth of opportunities that may have previously gone unnoticed or been passively disregarded.

Maximize your Performance and Profitability with the Latest Holiday Demand Shipping Strategies

The holiday season is a crucial period for shippers, and they must be adequately prepared to handle consumer demand. By strengthening carrier partnerships, seeking advice from trusted sources, and maximizing the value of technology you can position yourself for success. These strategies will allow shippers to perform to their highest potential this holiday season.