Biggest US retailers charter private cargo ships to sail around port delays

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Home Depot, Costco and Walmart resort to private charters for holiday shoppers to push to stock shelves

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Global supply-chain delays So dire that some of the biggest U.S. retailers have resorted to an overpriced and costly tactic to try to stock the shelves this holiday season: They hire their own cargo ships to import the goods. are.

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Port delays, the COVID-19 outbreak and labor shortages have halted the flow of products between Asia and North America, threatening the supply of everything from holiday decorations and toys to appliances and furniture. It is taking nearly 80 days to transport goods across the Pacific, or twice as much as before the pandemic, retail and shipping officials have said.

Walmart Inc., Home Depot Inc., Costco Wholesale Corp. and Target Corp. — among the largest U.S. retailers by revenue — are among companies that have chartered their own as part of broader plans to minimize disruptions. Paying for ships is an expensive and unaffordable option for most companies. Some chains are passing on these additional costs by raising prices for shoppers.

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Officials said chartered ships are smaller than those operated by companies such as Maersk and carry a small slice of total imports. According to freight forwarders, ships that hold about 1,000 containers are almost twice as expensive as the cost of carrying cargo on an average 20,000-container vessel.

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But charters do provide a way for large retailers to work around bottlenecks at ports like Los Angeles, Reshipping cargo to less congested docks such as Portland, Ore., Oakland, Calif., or the East Coast. It can also help retailers ensure that Key products such as electronics and décor Arrive for the holiday season.

Shipbrokers Said Small Ships Chartered for point-to-point journeys Now earn about $140,000 a day, which is many times higher than the levels before the pandemic, when such selling was rare due to the high cost. “They at least know that the inventory will arrive in time for the Christmas rush,” said Vicky Jervau, sales manager at Athens-based freight forwarder Eritrans SA.

In May, Home Depot executives were looking for new ways to get goods on time when they got the idea to rent their ship, something the company had never done before. “It was almost started, I think, as a joke,” said Sarah Gallica, vice president of transportation at Home Depot. “Let’s just rent a ship.”

Products arriving on chartered ships make up a small percentage of Home Depot’s total import volume, she said, but the changes allow the company to have more control over when products arrive in stores and prioritize the most in-demand products. . For Home Depot, charters are moving plumbing supplies, power tools, holiday decor, heaters, and other items.

Costco’s chief financial officer Richard Galanti said the retailer has chartered three ships, each capable of carrying about 1,000 containers, to transport goods between Asia and North America. Each vessel will make up to 10 deliveries to Costco the following year. Those ships will account for less than 20% of the warehouse retailer’s import volume from Asia next year, he said.

To read more from The Wall Street Journal, Click here.


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