• More promotional products are moving out of warehouses to retailers for the holiday season, according to the North America CEO for DHL Supply Chain.
• Overall, the consumer outlook is similar to last year, and the supply chain is looking more stable.
• One notable shift, according to DHL's Patrick Kelleher, is e-commerce spacing out delivery of products around big dates like Black Friday and Cyber Monday, giving warehouses the ability to cut down on labor costs.

The consumer continues to look healthy and the supply chain has regained stability as the holiday shopping season begins.

That's according to DHL Supply Chain's new CEO for North America, Patrick Kelleher, who told CNBC the shipping company is seeing more promotional items make their way out of warehouses and to retailers, but not in a signal of increased consumer weakness compared to the prior year.

"Across the board, we are seeing volumes very similar to what we've seen in past years, especially last year," said Kelleher.

Freight is considered a forward-looking indicator of a retailer's expectations of the consumer, and Kelleher said more promotional items have left or are leaving warehouses and filling store shelves, but he added, "I think it's very consistent from what we've seen in past years in terms of the combination of retailers' engagement of promotional strategies around particular product categories, sell-through of their core offerings. We don't see a big shift there."

This week, the National Retail Federation forecast that winter holiday spending would grow between 2.5% and 3.5% over 2023, consistent with its annual sales forecast, and reaching as high as $989 billion in total holiday spending in November and December, slightly above last year's level.

Amazon recently announced its plan to hire 250,000 additional workers for the holiday season, the same seasonal hiring level as last year.

But there is at least one big change behind the scenes this year, Kelleher said, with retailers' changing their approach to e-commerce delivery around big shopping events like Black Friday and Cyber Monday. "Typically, in the past, the expectation was to ship the same day or next day, but now there is appetite to level that volume out over a few days," he said.

Kelleher said that spreading out the volume of packages moved out of a warehouse allows a company to reduce the amount of labor required.

"This will achieve some cost efficiencies in getting that volume out because of inflation and cost," he said. "There are cost and margin pressures out there, so there are ways to profitably deliver peak season with few changes like that."

It means items would arrive a day or two later than in years past, but Kelleher said in most cases it won't appear to the consumer as a delay because shippers are clearly communicating delivery expectations in line with the shift.

"So typically, Cyber Monday is a heavy volume day," Kelleher said. "As we can extend some of those orders for shipment out to Tuesday and Wednesday, we can reduce the cost in the warehouse, and in many cases, we can still deliver to the customer's expectations, leveraging the amount of time that delivery companies have planned for pickup from the warehouse to delivery to the home."

While macroeconomic conditions can always change and holidays can underperform sales expectations, Kelleher said he expects the volume of freight on the move to remain stable going into the end of the year.

"Barring unforeseen circumstances, the supply chain disruptions that we've seen this year have stabilized, and we're all in a good position to deliver against the expectations of peak season," he said. "Generally, we're encouraged by the things we see in the marketplace."

Over the summer, the reduction in trucking capacity coupled with an increase in orders had logistics executives saying that the long freight recession was finally ending and rates would increase by the back end of the third quarter. In a sign of optimism about freight, shares of JB Hunt Transport Services, which have been under pressure over the past year, rose after outperforming earnings expectations this week.

Trump tariff threat

The trade outlook for the end of the year and into next year could be influenced by the outcome of the presidential election.

In a recent note to its clients, Piper Sandler warned of the swift implementation of tariffs by former President Trump if he wins the election. Trump has vowed he would have a baseline tariff on all foreign imports between 10-20%.

In a speech at the Detroit Economic Club, Trump said for cars produced in Mexico by Chinese companies, he would impose a tariff, "100%, 200% ... 1,000%. They're not going to sell any cars into the United States with those plants they're building."

A recent CNBC investigation found a much greater presence of Chinese manufacturing tied to Mexico as more companies attempt to nearshore manufacturing of both finished products and parts for final assembly and evade existing tariffs imposed by both the Trump and Biden administrations.

Reflecting data that shows the rising role of Mexico as a manufacturing and trade gateway, Kelleher said customers are not waiting on the election outcome to make plans.

"Chinese companies are not waiting for the outcome," he said. "We are seeing an increased manufacturing presence of Chinese companies in Mexico and an increased presence of companies from Asia establishing manufacturing in Mexico. We are certainly seeing shifts in manufacturing volume from China to other countries in Asia, Vietnam, and Thailand being very high on that list. So we think that is a trend that is embedded and will continue."

The increase of Asian nearshoring in Mexico is expected to be a part of the next review date under the United States-Mexico-Canada Agreement (USMCA), with the results of the presidential election likely to influence the outcome. On July 1, 2026, the U.S., Mexico, and Canada will confirm in writing whether or not to continue the agreement, and one or more of the three parties can decide to take the step of not renewing the agreement.

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