Businesses will get 'crushed' by supply chain snags, expert warns

close video US retailers to see very dismal 2023, small businesses crushed: Salvatore Stile

Alba Wheels Up International founder Salvatore Stile says importers and retailers are predicting a supply chain decline coming about.

One supply chain logistics expert is warning that more importers and retailers are signaling a shipping "decline coming about" and carrying into the new year.

"I went into a major retailer recently just to get a feel of the products in there, and I'm seeing summer goods when it should be fall and winter goods for children," Alba Wheels Up International founder and president Salvatore Stile said on "Mornings with Maria" Monday. "So I really think that, especially 2023 is going to be very dismal."

The custom shipping brokerage company has reportedly seen a 20% decline in ocean freight orders in recent months, according to its founder, who claimed excess inventory and a possible resurgence of nationwide rail strikes are factors playing into retailers’ worries.

Last month, spending at retail stores fell flat as consumers continue to confront the hottest inflation in 40 years.

Retail sales, a measure of how much consumers spent on a number of everyday goods, including cars, food and gasoline, was unchanged at 0% in September, the Commerce Department reported. Economists surveyed by Refinitiv expected sales to increase 0.2%.

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That is a marked decline from the upwardly revised data in August, which showed that retail sales actually climbed 0.4%.

Alba Wheels Up International founder and president Salvatore Stile says the supply chain could see a “very dismal” year in 2023 on “Mornings with Maria” Monday, October 31, 2022. (Getty Images)

The September advance is not adjusted for inflation – which rose 0.4% last month – meaning that consumers may be spending the same but getting less bang for their buck.

Stile said the retail data is showing a "false impression" of consumer spending.

"I think that was really unhealthy spending," Stile explained. "Credit card debt has increased, it's taking longer for consumers to pay their debt, and I think a lot of the spending was due to retailers giving special sale items on excess inventory that they had from the previous months."

The shipping expert also discussed the impact of a national railroad worker strike after a second labor union rejected a tentative agreement with major freight companies brokered by the Biden administration.

"It was very vague… I don't know how you could get 12 major unions with 100,000-plus members to come to an agreement within a relatively short period of time," Stile noted. "One railcar is the equivalent of four to five truckloads. So, could you imagine having to strike with perishable goods that are probably not insured?"

Small businesses would get “crushed” by a looming nationwide railroad strike after two unions rejected a Biden-brokered deal, Salvatore Stile said on “Mornings with Maria.” (Getty Images)

If strikes do take place and disrupt rail shipments, Stile predicted small and medium-sized businesses would get "crushed."

"You'd be stratospheric pricing, especially low on food and perishable items," the Alba Wheels Up founder said. "I think it's a real major issue."

Multiple union members told FOX Business they are frustrated that their union representatives signed off on the presidential board's recommendations, arguing the agreement did not do enough to improve working conditions.

All 12 unions involved in the negotiations must agree to ratify their new contracts or a strike could occur that would devastate supply chains and the economy at large. At present, the soonest a strike might happen is mid-November. If a work stoppage is triggered, Congress is expected to get involved.

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Stile warned the longshoremen working at the West Coast shipping ports will also be closely monitoring the rail union deal’s potential fallout.

"The longshoremen on the West Coast are very carefully watching what happens with the rail strike because they are still in negotiations on the West Coast," he said. "So could you imagine now if the rails get a great deal and the longshoremen don't get as good a deal, what are they going to do?"