Spark Global Limited Reports:
As supply chain channels are disrupted by the COVID-19 pandemic, major retailers like Target Corp. and Home Depot Inc. are taking matters into their own hands, chartering ships to ship in time for the important holiday season.
Retailers large and small, consumer packaged goods companies and others have been affected by covid-19-related port bottlenecks, overseas manufacturing closures and other high costs associated with moving goods. Dollar Tree Inc. For example, a ship was delayed for two months after a crew member tested positive.
Big-box retailers with deep pockets are deploying their vast financial resources to avert holiday season supply chain disaster — but at a cost.
“It’s a very expensive thing to do,” said Michael Zimmerman, a partner at Kearney, a global consulting firm. He says chartering ships is the current solution. “If you’re a mid-size retailer or an emerging fashion brand, you can’t rent your own boat.”
According to Zimmerman, the cost of renting a boat is about $1 million to $2 million a month, plus operating costs, which include the rental of containers, which can run into the hundreds of dollars. The biggest retailers use 500 to 1,500 containers a month.”The most important aspect is capacity, not economy,” Says Zimmerman.
“Yes, there are savings to be made, but you’re renting for two to three years, so it’s an important commitment that you’ll need to stick with or sublet later at a loss if the seaborn container market crashes again.”
Still, given these eye-popping prices and the huge risks involved, chartering companies now have a say in where ships go, giving them the flexibility to bypass clogged ports and other systems.
“Cargo has been shifting to other ports, with imports through the ports of Seattle and Tacoma up 40.6 percent year-over-year over the same period,” Panjiva, supply chain research at S&P Global Market Intelligence, said in a report. Imports through east Coast ports rose 36.1 percent.”