Shipping mania flashpoint: Retailers charter boats
The world’s shipping chaos is pushing mega-retailers to make new investments: their own cargo ships.
Why it matters: It’s one way big companies are trying to circumvent the pandemic-fueled supply chain crisis that’s left store shelves sparse.
What’s happening: Home Depot and Walmart are among those chartering vessels in the mad dash to get stuff from overseas.
- "We have a ship that's solely going to be ours and it's just going to go back and forth … 100% dedicated to Home Depot," the company’s COO said.
- Merchants are "chartering vessels specifically for Walmart goods," though some items are still out of stock more than usual, CFO Brett Biggs told investors last week.
The intrigue: Chartering a vessel can cost around $40,000 per day, per one estimate cited by NBC News — in other words, a rounding error for corporate giants.
- Some transportation service companies are expanding offerings for chartering vessels in response "to high demand from existing retail customers," NBC reports.
But it’s likely not an option for smaller shops. That may make it more difficult for them to compete, at a time when pandemic pains have faded faster for bigger players.
One reason: Most other retailers aren’t bringing in nearly enough merchandise to fill a vessel — something that makes it economical for their giant counterparts.
- “For most other companies, this mismatch makes chartering vessels economically out of reach,” says Nate Herman, a policy executive at trade group American Apparel & Footwear Association.