New research shows that mid-range retail is the most attractive price range for consumers.

• According to a new CNBC Supply Chain Survey, shippers are worried that U.S. consumers will cut back on their overall purchases during the 2024 holiday season and seek out mid-range priced retail merchandise.
• Almost 80% of freight orders expected to be placed during the peak holiday season are middle-priced, according to a CNBC survey.
• During the holiday season, U.S.-based companies will import slightly more items than last year, according to a survey suggesting a relatively healthy consumer.

According to the CNBC Supply Chain Survey, U.S. retailers anticipate that consumers during peak season will be selective and seeking discounts in the mid-range price range.

During the season when most freight orders are placed to prepare for back-to-school and holiday shopping, supply chain respondents indicate a healthy, yet cautious consumer, and a holiday season that is expected to fall within normal parameters.

This year, U.S. companies will import slightly more items for the holidays based on freight orders scheduled during peak season, according to respondents.

The CNBC survey, conducted between April 16 and May 3, includes responses from various organizations such as the National Retail Federation, American Apparel and Footwear Association, United National Consumer Suppliers, OL USA, ITS Logistics, Kuehne+Nagel, DHL, and Uber Freight, a subsidiary of .

The survey reveals that, like the previous year, respondents anticipate a decrease in demand for luxury and aspirational luxury imported goods during the peak season.

C.H. Robinson's head of retail logistics, Noah Hoffman, tells CNBC that consumer discretionary spending has reached an inflection point in the economy.

"According to Hoffman, consumers are becoming more value-driven in their shopping habits. They are buying tighter and avoiding larger bills by shopping around for the lowest prices in clothing and jewelry, electronics, home and garden, and other categories."

Fewer orders for promotional items were reported by participants, compared to 79% of survey respondents expecting consumers to shop for bargains in the middle-price-point range.

According to Hoffman, general leeriness among retailers continues.

""Retailers are particularly cautious about making decisions, as they are waiting to see how the economy will fare before taking any action," he said."

Maersk, the world's second-largest ocean freight company, expects a "normal" peak season, according to Charles Van der Steene, president of Maersk North America. In a recent interview with CNBC, Van der Steene stated that there are no indications of a slower or bigger peak season. He believes in a normalized peak season, with the latter half of the year being more skewed for certain industries, such as retailers.

Walmart's executive team announced on Thursday that it is gaining more customers with "higher income" as they come to the company more frequently than before, both online and in physical stores.

Although there may be a slight increase in volume and price of items, a majority of respondents remain cautious about a consumer spending spree, with 56% expressing concern about a potential pullback later this year.

While transactions increased by 3.8% in the most recent completed quarter, the average ticket remained unchanged compared to the previous year, according to Walmart. "Customers are still being cautious with their spending," said Rainey.

Uber Freight's head of intermodal, D'Andrae Larry, stated that while consumer spending has rebounded from its winter slump, a market shift may occur later this year, and it is predicted that consumer spending will decrease during the holiday season.

"One survey respondent stated that they will be shifting their focus towards middle-market luxury goods, with a comparison between Home Goods and Bloomingdale's."

This, according to Hoffman, will intensify competition among stores and on shelves, potentially rendering the current data incomplete in terms of consumer behavior trends.

A feared port labor strike could influence shipping

The expiration of the six-year contract between the International Longshoremen's Association and the United States Maritime Alliance on September 30 is causing concerns about a potential strike at East Coast and Gulf ports, which could impact the timing of orders.

The union set a cutoff date of May 17 for local contracts to be agreed upon in order to negotiate an overall master contract for the largest union of port workers in North America. In contrast, the ILWU negotiated a master contract first.

The National Retail Federation's vice president of supply chain and customs policy, Jon Gold, stated that as peak shipping season approaches, many expect another busy holiday season and are taking proactive measures to guarantee timely delivery of holiday cargo.

"The American Apparel and Footwear Association's senior v.p. of policy, Nate Herman, stated that brands are cautiously optimistic about the upcoming holiday season but are taking precautions by bringing products in earlier and balancing shipping between the East Coast and West Coast due to ongoing crises and fears of future crises. During this time of uncertainty, logistical challenges, and inflationary pressures, it is crucial for the Biden administration to ensure that we do not experience any further disruptions as a result of the ongoing East Coast labor negotiations."

Two months ago, some logistics managers told CNBC they were going to pull forward their peak season freight in June to avoid containers being stuck at the ports due to the fear of an ILA strike at the East Coast and Gulf ports. However, the majority of those surveyed now believe that peak season will be during the normal delivery of July and August. The reversal of this decision is due to the last strike occurring in 1977, which lasted 44 days, and the quiet nature of the negotiations.

The peak season is usually from July to August, and there are additional holiday orders during September and October.

Not all logistics respondents concur on the optimal time for peak season orders this year.

"According to Hoffman, the 7,500 retailers we serve are currently striving to maintain a diverse range of SKUs while simultaneously avoiding excessive safety stock due to the unpredictability of consumer demand in the upcoming months. This could potentially result in a delay in the peak season, with retailers postponing holiday orders."

C.H. Robinson's director of ocean shipping, Ali Ashraf, predicts that the industry may experience a slowdown in June due to shippers having already pulled freight forward in anticipation of the Chinese holidays and carriers implementing higher rates on May 1.

"We anticipate a strong ocean shipping season this summer, but it's uncertain how quickly it will pick up. We expect it to pick up in July, August, and September, but the speed of recovery remains uncertain."

If retailers delay holiday orders, Ashraf predicts longer lead times for receiving goods.

More trade is moving back to the West Coast

The amount of freight moved is crucial for the logistics industry to generate revenue, while the price of products can provide insight into consumer demand.

""Ocean volumes have increased by double digits this year compared to last year, and bookings are now three weeks out," Ashraf stated."

The West Coast is seeing an increase in trade due to U.S. port import volumes.

Due to the West Coast push, ITS Logistics' vice president for enterprise accounts, Paul Brashier, has informed CNBC that congestion is already occurring at the Port of Los Angeles' terminals, which handle freight destined for the interior of the U.S. via inland point intermodal rail.

"According to Brashier, the strain on rail infrastructure due to the diverted volumes moving to the U.S. East Coast will be significant, as it may indicate a traditional West Coast heavy volume retail peak season, though a little earlier in June and July."

The increased volumes to the West Coast are being caused by a potential ILA strike, Panama Canal drought restrictions, and Red Sea diversions.

"To prepare for the peak season, DHL Global Forwarding Americas is actively addressing challenges by diversifying shipping strategies and increasing reliance on rail networks, as stated by Tim Robertson, CEO. The company's focus is on maintaining the integrity and responsiveness of the supply chain during high-demand periods."

The preferred mode of transport for moving freight back to the East Coast from the West Coast is rail, with 77% of respondents choosing this option. This will benefit companies such as Union Pacific and BNSF, as well as trucking companies involved in the truck-to-rail or rail-to-truck strategy transloading.

The freight recession has negatively impacted trucking companies, and any increase in freight coming in would be appreciated. One example of this is the Q1 earnings miss experienced by the industry due to a decrease in manufacturing orders.

During the peak season, transloading, a popular approach to moving freight that combines rail and trucking, is expected to be an attractive strategy due to the Covid supply chain shocks.

Larry said shippers need optionality to navigate unexpected crises.

Uber Freight's latest market analysis shows that rail utilization is improving and is currently near the five-year average. Additionally, rail terminal dwell time has been decreasing year-over-year. However, there was an exception in January due to weather events, which caused delays and congestion in the railroad networks.