The 4th quarter proves beneficial to retailers nationwide, accounting for nearly 40% of their yearly profits. But this year, profits may decrease as businesses attempt to recover from the damaging affects of Hurricane Sandy.
Before Hurricane Sandy touched down on the east coast last month, sales were down 10% this year but with closures, damaged goods, and outages resulting from the storm, sales are now down 15%. 1
In addition, with the northeast accounting for around 20% of the nation’s GDP (an estimated $3 trillion), nearly 0.5% of the 4th quarter’s growth is expected to be lost, a significant consequence being this year’s annual GDP was expected to reach 1-2%. 2
Over 8 million people lost power from the storm, along with significant flooding which led to the total destruction of several warehouses as well as closing of New York and New Jersey ports, resulting in delays, cancellations, and insurance claims for damaged/lost freight. 2
As one online retailer (Wayfair.com) noted, between “1,300 of its 4,000 suppliers were hit by everything from loss of power to flooding,” closing their doors for several days, even weeks. 2
And with Black Friday (the busiest shopping day of the year) less than two weeks away, retailers are now facing a shortage of orders as the ports are expected to have delayed shipments by several weeks as well as capacity becoming even tighter. As Association of Bi-State Motor Carriers’ president Jeff Bader states, he had “heard of numerous small trucking companies that are ‘totally destroyed,’ when the water got into their trucks, and are no longer able to operate as a business. That is a reduction that could create a shortage in vehicles to carry the goods.”3
In addition to the impacts of Hurricane Sandy, the trucking industry faces a 3.4% increase in tonnage in October compared to last year, which the American Trucking Associations notes as “the smallest year-over-year increase since December 2009.” 4
A change in consumer spending accounts for this small increase as more people turn towards gift cards for the holiday season rather than the hassle of choosing gifts. This change provokes a greater retail spending post-Christmas rather than prior as gift cards are traded in to capture the after holiday sales.
As the ATA’s Bob Costello notes, “Retailers used to stock up stores and we would be hauling it now and even earlier. Instead, they’ll ramp up and put in a last-minute push — pushes that can throw the supply chain in for some havoc,” which then turns into higher costs as trucking companies charge for premium service that often lead to higher prices for consumers. 4
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1http://www.abcactionnews.com/dpp/money/could-hurricane-sandy-affect-toy-sales
2http://www.cnbc.com/id/49698652
3http://www.northjersey.com/news/business/177418711_Ports_scramble_to_get_back.html
4http://www.omaha.com/article/20121111/MONEY/711119939/1697






















