America’s largest retailers charter private cargo ships to bypass port delays

Delays in the global supply chain are so severe that some of America’s largest retailers have resorted to an extreme – and expensive – tactic to try and stock shelves this holiday season: they charter their own freighters to import goods. .

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Port delays, Covid-19 outbreaks and labor shortages have plagued the flow of product between Asia and North America, threatening the supply of everything from holiday decorations to toys appliances and furniture. It takes around 80 days to move goods across the Pacific, twice as long as before the pandemic, retail and shipping officials said.

Walmart Inc., Home Depot Inc., Costco Wholesale Corp. and Target Corp. – some of America’s largest retailers by revenue – are among the companies paying for their own chartered vessels as part of larger plans to mitigate disruption, an option expensive and unattainable for most businesses. Some chains pass on these additional costs by raising prices for buyers.

The chartered vessels are smaller than those operated by companies like Maersk and carry only a small portion of total imports, the executives said. According to freight forwarders, ships that can hold around 1,000 containers are on average almost twice as expensive as the cost of transporting goods on a typical 20,000 container ship.

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But charters provide a way for large retailers to bypass bottlenecks at ports like Los Angeles, redirecting cargo to less congested docks like Portland, Oregon, Oakland, California or the East Coast. It could also help retailers ensure that key products like electronics and home decor arrive for the holiday season.

Ship brokers have said small vessels chartered for point-to-point voyages now earn around $ 140,000 a day, several times more than before the pandemic, when such crossings were rare due to the high cost. “They at least know that inventory will arrive in time for the Christmas rush,” said Vicky Zervou, sales manager at Athens-based freight forwarder Aritrans SA.

In May, Home Depot executives were looking for new ways to move goods in a timely manner when they came up with the idea of ​​chartering their own vessel, something the company had never done before. “It was almost a joke, I think,” said Sarah Galica, vice president of transportation at Home Depot. “Let’s just charter a ship. “

Products arriving on chartered vessels make up a small percentage of Home Depot’s overall import volume, she said, but this change allows the company to have more control over when products arrive in stores. stores and prioritize the most demanded products. For Home Depot, charters carry plumbing supplies, power tools, Christmas decorations, heaters, and other items.

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

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