Consumer sentiment gap widens by income
The December 2024 University of Michigan consumer sentiment index confirmed what early holiday sales indicated: Recent retail sales performance has been driven by higher-income consumers while lower-income consumers are challenged to maintain expenses for daily life. Products popular with higher-income consumers are currently outperforming lower- or entry-level products.
The same report from November 2024 report saw a nearly 20-point difference between high-income and low-income groups, whereas the gap between those two groups was only 2-points in January 2023. This presents a challenge for retailers when creating product and pricing strategies, particularly around discretionary items.
Consumer spending is a key driver of both the economy and freight demand. With many watching the direction of the truckload and LTL markets in 2025, consumer behaviour will be influential in maintaining and growing freight demand that could lead to a shift in the transportation market.
Impact of labour market dynamics
The impending expiration of the International Longshoremen’s Association’s (ILA) temporary labour agreement with the U.S. Maritime Alliance (USMX) on 15 January, 2025, creates significant uncertainty for labour operations at U.S. East and Gulf Coast ports. Many large retailers utilise these ports as key gateways into their U.S. distribution networks, so any prolonged disruption will be meaningful to retail supply chains. Agriculture imports and exports are particularly affected by a strike as their products have higher potential for spoilage.
Evaluate and implement contingency plans for all aspects of transportation, including inland moves. Proactively moving containers off terminals before a potential strike can help to prevent access issues if the terminal closes, ensuring a more resilient supply chain for critical energy imports. Typically, one day of a port strike creates six days of backlogue, so evaluating your specific situation throughout the duration of any strike is always important.