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Sea-Intelligence reports surge in retail inventories

The latest data from the US Census Bureau shows that there is a consistent inventory increase in the retail sector.

According to Danish maritime data analysis firm Sea-Intelligence, not only are retailers increasing inventories, but the pace of increase has also quickened.

The following figure illustrates the trajectory of retail inventory levels, along with a trend line that reflects developments from 2009 to 2019.

“Source: Sea-Intelligence.com, Sunday Spotlight, issue 688”

The chart clearly shows that current inventory levels are now exceeding this historical trend. By August 2024, inventories are approximately US$26 billion above what would be expected based on the trend alone.

“Which brings us to a very important question: how much have inventories historically deviated from the trend?” wonders Alan Murphy, CEO of Sea-Intelligence.

The second figure provides a percentage-based perspective, tracking this deviation from a post-financial crisis baseline. The recent spike from July to August 2024 is the largest seen since the financial crisis, indicating that retailers are not just increasing inventories but doing so well beyond historical norms.

“Source: Sea-Intelligence.com, Sunday Spotlight, issue 688”

“It would therefore be correct to say that not only are retailers building inventory, but they are building inventory which is very excessive compared to the long-term trend,” pointed out Murphy.

He went on to explain, “It is therefore beginning to emerge that the early onset of the peak season has been driven by retailers moving in products earlier, than they were being sold. If this is the main driving cause, it would also imply a subsequent sharp drop in imports – which indeed tallies with the market developments shown in spot rates on the Transpacific since the peak in mid-July.”

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