The way the average American spends their money has changed radically over the past two years. As Fortune terms it, less shopping, bluer skies is the focus, as shoppers look to spend their disposable income in a manner that is both sustainable and convenient. What’s more, different areas of the country are changing their consumption in such a way that it’s having a big knock-on effect on the shipping industry.
The revenge spend
Lockdowns tightened spending for families across the country and this has seen a bounceback in so-called ‘revenge’ spending - money spent on luxuries in excess of normal household budgets. A look at nationwide trends shows just how much individual states are willing to spend; on wedding rings, for instance, the northeast region (Vermont, DC, New Jersey) put out up to $9,000 on engagement rings. Across the country, states with the tightest restrictions have seen the highest amount of spending, as CBS 4 Denver outlines. This increases shipping pressures in those extremities.
Consumers are more frequently eating locally. According to research conducted by Michigan State University, interest in direct-from-farm eating rose 50% over the past 12 months. This puts more pressure on local freight networks and creates a huge drop in the importance of ship freight. Ingredients sourced and put together locally are far more important than those shipped in from other countries, and that’s showing in the freight numbers being seen cross-country. However, there may be a role to play for other forms of container movement that will see further impetus taken away from the ocean.
Return of rail?
The Biden administration infrastructure plan has huge investment planned for rail - up to $160 billion. This isn’t a simple vanity project. As CNet outlines, the US is undergoing a big push to start buying American. Supply chain independence is craved by the federal administration and by states, too, in wake of the recent disruption. This will put more pressure onto road freight, but there is an opportunity for rail, too, especially in servicing the increasingly busy Midwest and, potentially, the South.
What this points to is a shifting face in the American consumer market. A focus on locally produced food and consumer goods alike means that this change is set to be long-term. How that impacts the freight industry will be further influenced by federal policymaking.