In 2021, consumer spending on air travel, restaurants, and other services has rekindled. However, the container shortage carries on as import demand remains at peak volumes.
Increased Consumer Spending on Services
Data collected by 1010Data shows a year-over-year (y/y) rebound in domestic travel spending since late March 2020, with high y/y numbers in April. Note that spending in April 2020 was depressed by lockdowns.
- Airlines: 356% increase y/y
- Car Rentals: 285% increase y/y
- Hotels: 270% increase y/y
1010Data showed a similar rebound in restaurant spending since late March 2020, with y/y gains peaking in April 2021.
- Casual dining: 76% increase y/y
- Fast-casual dining: 30% increase y/y
- Fine dining: 308% increase y/y
Since 1959, there has been a gradual shift from goods to services. The leap from services to goods seen in 2020 is outside any past jump seen in recorded container shipping history. This makes it challenging to predict a timeline for the future.
It is believed that container imports surged because consumers bought an increased amount of goods while COVID-19 prevented them from buying services. Strong goods spending is coexisting with strong services spending, keeping U.S. imports demand historically high. The inventory to sales ratio has been historically low.
Container imports remain at peak volumes. Spot ocean rates are still rising. Inventory-to-sales ratios remain low. The increased spending on services has not affected the demand for goods, and as a result, containerized import demand.
The worldwide availability of container equipment is a significant driver of freight rates. In addition, numerous economies are much further behind the U.S. in terms of vaccinations and recovery.
Looking into 2022
Consumption patterns are likely to go back to normal, meaning more spending on services and less on goods than in 2020. The U.S. had not recovered inventories to get out of this in 2021. So we have to look to 2022 for a sense of normality regarding the cargo container shortage.
As COVID-19 hospitalizations decrease, consumers are likely to spend more on services. As 2021 goes on, import demand is likely to reach a balance, cargo rates could decrease, and the market could return to normality by 2022.
However, it is essential to keep in mind that there are many economies still suppressed by COVID-19. Parts of the global economy are not at the same level of recovery as countries such as the United States. Therefore, we could see an imbalance lasting into 2022.