English     |     Español     |     Français
Exporting to Canada - Experts in trade for developing countries - TFO Canada
HIDE
  
Sign In or Register
Username:     Password:
 
Remember me   Forgot password?
Not a member? Register here
Not a member? Register here    
Home > About TFO Canada > News

Trade News

Each day TFO Canada publishes a sample of trade news on the Canadian import market along with any new, updated or changed regulations and legislations regarding international trade; countries in which TFO Canada offers services and on the export sectors which it promotes.

 

Through good times and bad times, e-commerce rages on

Friday, May 18, 2018 > 12:39:26
Print


Freight Waves





The retail sector has been subject to quite a bit of volatility over the past couple of quarters, with hurricanes, snowstorms, a booming holiday season, and the ensuing spending hangover causing wild swings in performance.

Retail spending overall enjoyed one of the strongest quarters of growth since the recession in the 4th quarter of 2017, rising at an impressive 10.4% annualized pace. This was promptly followed with one of the worst quarters of growth during the 1st quarter, where sales advanced at a 0.8% pace. Real consumer spending on goods, adjusted for inflation, actually fell for the first time in nearly seven years at the start of 2018 after experiencing the strongest growth in over a decade in the previous period.

Despite the fluctuations in overall retail performance, e-commerce growth has been remarkably steady. The Census Bureau reported yesterday that e-commerce retail sales grew at a whopping 16.7% annualized pace during the 1st quarter, putting e-commerce sales at 16.4% higher than at this point last year. E-commerce now makes up 9.5% of total retail spending, and continues to make rapid share gains in the retail space.

Part of the reason for this resilience in e-commerce spending is that many of the factors that can derail total retail spending, such as major weather events, can actually push additional spending into online channels. Households may find themselves snowed-in during a massive winter storm, spending time purchasing what they can online even though. That certainly helps explain some of the results during the 1st quarter, as unusually harsh winter weather events occurred all the way until the end of the quarter.

But the experience over the past couple of quarter is only part of a much broader trend. Consider that since the recession ended, e-commerce sales have yet to experience a single quarter of decline. The annualized pace of growth in e-commerce has only fallen below 10% three times. Through tax law changes, gas price surges, debt ceiling crises, government shutdowns, and strengthening and weakening currency, few things can be counted on more reliably that double-digit growth in e-commerce.

Driving transportation demand

Companies are always in search of markets and sectors of the economy that grow faster than the economy overall. For years, transportation companies benefitted from rising globalization in the world economy, as international trade growth consistently outpaced global economic growth. But trade growth has been far more erratic over the past couple of years, and protectionist rhetoric and policy moves have been on the rise, leaving no guarantee that international trade will be the driver of volume growth in the future that it had been in the past. E-commerce trends appear to be resistant to these fluctuations as well, as cross-border and international online shopping remains one of the strongest growth areas in global trade.

What this means is that businesses that utilize and develop useful e-commerce strategies can effectively find a source of revenue growth, even as conditions in the overall economy change from year to year. This fact is not lost on carriers and transportation companies in the economy. Parcel companies such as UPS and FedEx have long enjoyed healthy volume growth, as surging residential package growth has driven overall parcel demand well beyond the pace of economic growth. It is one of the reasons why DHL, who once essentially abandoned the US market, is pushing for new solutions for US residential deliveries, and why Maersk is looking to expand into the last-mile parcel delivery space.

Trucking and LTL companies have also benefited from the surge in e-commerce demand. The desire for retailers to locate closer to end consumers has expanded distribution networks across the country, and increased the amount of freight movements in the economy. These kinds of movements helped sustain tonnage in the economy during 2015 and 2016, even as the industrial sector of the economy suffered significant losses, as carriers benefited from the spillover effects of e-commerce logistics.

In addition, trucking and LTL companies have increasingly gotten involved in last-mile delivery services. As e-commerce has grown, so have the categories of goods that get purchased through online channels. Large items such as furniture and appliances are now routinely ordered online, and LTL and freight companies have pushed to enhance their residential delivery capabilities. UPS is reportedly in talks to expand their services to include larger items, and it is a sure bet that its competitors will soon follow suit.

These kinds of developments are likely to continue going forward, as e-commerce growth continues to drive innovation in the transportation and logistics space. Results during the 1st quarter help illustrate that whether the economy is doing well or slowing down, e-commerce will make gains.


Contact TFO Canada
Meet Our Supporters
TFO Canada
130 Slater Street
Suite 400
Ottawa, Ontario
CANADA   K1P 6E2
T 1.613.233.3925
F 1.613.233.7860
Canada Toll-Free:
1.800.267.9674

TFO Canada on YouTube
 
© TFO Canada   |   Sitemap   |   Terms & Conditions   |   Privacy Policy   |   Contact Us