Low Inventories Require Reliable Freight Shipping
04/16/2012 — Scott Frederick
The U.S. Department of Commerce recently released updated statistics on business inventories. While inventory levels continue to be somewhat flat, the rate of demand for reliable freight shipping services and on-demand types of shipping are growing - this according to Armada, an executive intelligence firm based in Kansas City, MO. Armada believes the low inventory trend will drive upexpected spikes in raw material and commodities demand, which ultimately may drive sales at the retail levels as well. But this short-term "whip-saw" effect may not be indicative of longer-term growth trends. They also contend that inventory replenishment continues to be at the very fundamental base of much of what is happening in the broader economy. The chart shown below helps show how business sentiment is keeping inventory balances very low, while maximizing "just-in-time" inventory strategies relative to sales -- ultimately keeping overall inventory-to-sales levels at near 20 year lows.
What does this mean for small business? It appears that retail growth rates will remain steady for the foreseeable future, but that some of the short-term spikes we may see in shipping could be related to inventory replenishment strategies rather than true consumer demand. Stay tuned, and check out the www.armada-intel.com website for more interesting strategic and economic insights.