The Floral Insight Newsletter— The Wizards Wand News September 25th, 2023
Greetings from the Wizard!
We’re thrilled to announce that Proflora 2023 in Bogota is around the corner, and this excitement has inspired us to release this month’s newsletter a bit early. What’s more, we’re delighted to share that Above All Flowers and New Bloom Solutions recently attended the SAF Convention during Labor Day week!
As an active member of the SAF grower’s council, The Wizard participated in enlightening meetings also open to SAF members. We engaged in discussions about current business trends and challenges alongside growers, breeders, scientists, and industry lobbyists.
Excitingly, Above All Flowers and New Bloom Solutions will also be heading to Proflora and will be at booth #2605. We’ve received significant interest from international companies looking to leverage our services.
We’re eager to help different farms, distributors, importers, and service providers either enter the North American market or expand their existing market share with our wide range of business services and solutions.
Furthermore, The Bloom Show has received an invitation from Proflora and will be recording a special episode from our booth, #2605, hosted by Williee Armellini (from Flower and Cents), David Kaplan, and Sahid Nahim. We cordially invite all of you to visit our booth and join in the excitement.
And now for the magical news and the industry crystal ball.
As summer officially comes to a close, we’re experiencing a notable uptick in business activities. While it might not reach the heights of 2021 or 2022, it’s a significant improvement from the summer doldrums. Fall items are selling briskly, and there’s a surge in pre-bookings for Christmas greens and plants.
As usual, let’s dive into some economic factors influencing disposable income.
The Fed: Interest rates appear set to remain elevated for an extended period and maybe even increase. Additionally, a federal government shutdown looms on the horizon, potentially affecting spending. Concurrently, autoworkers are on strike, adding another layer of complexity to this eventful September.
In August, corporate bankruptcies increased by 17% from the previous month, continuing a year-long trend of rising filings. This trend has been partly attributed to Federal Reserve policies, which may indicate overcooling and result in tighter lending conditions.
Producer prices unexpectedly rose by 1.6% from a year earlier and 0.7% from the previous month, largely due to escalating energy costs. The consumer price index in August saw a 3.7% increase compared to August 2022, marking the second consecutive increase and the largest one in 2023.
Although U.S. consumers are cautiously optimistic about a slowdown in inflation, consumer sentiment declined more than expected, slipping from 69.5 in August to 67.7 in early September, as per the University of Michigan index.
The resurgence of American manufacturing is accompanied by a resurgence in labor strikes, with threats and actual strikes (e.g., UPS, UAW, Screen Writers) driving up labor costs. Job seekers are increasingly drawn to positions offering better conditions and benefits, prompting a change in employment dynamics. While data suggests some softening in the U.S. labor market, the overall economy continues to create jobs.
FedEx and UPS have curtailed some of their flights, while Amazon has ramped up its operations. FedEx reduced domestic cargo flights by 14% year-over-year for July, and UPS reduced operations by 13% for the same period, whereas Amazon’s flight activity surged by 16%. These adjustments reflect both reduced volume for UPS and FedEx and cost-cutting measures.
Our prediction of rate hikes for FedEx and UPS has unfortunately come to pass, with UPS reaching a new high salary contract. Oil prices are on the rise, potentially approaching $100 per barrel. These energy cost increases have far-reaching implications across various sectors.
FedEx plans to increase rates on January 1st, with an average rise of 5.9% for various services. The good news is that this increase is lower than the previous year. UPS is matching FedEx’s rate increase and offering senior pilot buyout agreements to reduce costs. Meanwhile, the U.S. Post Office announced no peak-season delivery surcharges, unlike their competitors.
Due to drought conditions, the Panama Canal continues to face logistical and cost issues, with restrictions imposed earlier this year set to remain in place until next year.
In September, homebuilder confidence in the market for newly built, single-family homes dipped to 45, a five-point decrease from the previous month, primarily due to mortgage rates remaining above 7%. This has reduced buyer purchasing power and prompted builders to increase price cuts.
Personal consumption is expected to decline early next year, according to over half of the respondents in Bloomberg’s latest Markets Live Pulse survey. This decline would mark the first quarterly drop since the onset of the pandemic. Meanwhile, 21% of respondents anticipate the drop will occur in the last quarter of this year as consumers utilize their COVID-19 savings and face increased borrowing costs.
Spending on influencer marketing is set to increase by 16.9% globally this year, surpassing $34 billion. The U.S. is a major player in this trend, accounting for over $26 billion of the expenditure, with a growth rate of 17.6%. We’re witnessing this influencer wave helping drive floral sales through various social channels!
The strong U.S. dollar against the euro, along with the fluctuating Colombian peso against the dollar, presents challenges. Coupled with increased minimum wages in Colombia, we anticipate difficulties ahead. Inflation is also on the rise in many countries we import flowers from. The ongoing Ukrainian conflict continues to disrupt certain markets and push growers to explore alternative shipping destinations.
Additionally, a government shutdown is a looming possibility, casting a shadow over politically motivated budget negotiations scheduled for the end of September.
As autumn arrives, we appreciate your continued readership. Keep an eye out for our exciting collaboration with Armellini Trucking, Flowers & Cents, and Cargolite, offering innovative and cost-effective flower shipping solutions that can revolutionize the box industry and logistics industry. It is a sustainable and efficient flower box system that we are all very excited about. On October 25th, Armellini will be hosting customers who are interested in learning more about Cargolite for a live presentation of the system. See you there!
I am glad the fall has finally come. Thank you for reading my rants, as usual.
The Flower Wizard