In what some are saying is among the worst container shipping conditions ever, Home Depot is taking matters into its own hands by leasing a dedicated container ship that will carry nothing but the retailer’s own cargo.
Supply Chain Digest Says...
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| Consumers are seeing the impact of the global logistics challenges in the form of out-of-stocks, long waits for delivery for ecom orders, and now higher prices at the store and on-line. |
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As reported over the weekend by CNBC.com, president and chief operating officer Ted Decker said in an interview that “We have a ship that’s solely going to be ours and it’s just going to go back and forth with 100% dedicated to Home Depot.”
It is the first time the company has chartered a ship.
The ship will begin to carry Home Depot cargo sometime next month.
Decker also said the retailer has been using much more expensive air freight for some imports, notably power tools, faucets, electrical components, fasteners and other smaller, higher value items, where the extra shipping costs represent an acceptably low percent of product cost.
Capacity issues have also forced Home Depot to purchase some container moves on the spot market, even though spot rates have risen to about four times as much as contract rates.
The spot market price for shipping a 40-foot container has gone up over 150% on the Asia to US West Coast lanes and risen even more on for Asian to US East Coast moves over the past year.
Home Depot is the third largest US importer by volume of ocean containers.
Decker told CNBC that the company “has a solid, contracted amount of capacity that our suppliers have largely honored,” but that it was worth the extra costs for alternative transportation moves to keep customers satisfied. He added the stay at home orientation that has fueled demand for Home Depot’s products is bound to ebb before long.
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After strong growth in 2020, the company’s same-store sales soared another 31% year-over-year in its fiscal first quarter.
Consumers are seeing the impact of the global logistics challenges in the form of out-of-stocks, long waits for delivery for ecom orders, and now higher prices at the store and on-line.
Problems are likely to persist into the peak season arriving soon.
“We’re seeing [issues with] everything from apparel to footwear into furniture, handbags, toys, consumer goods, electronics,” Jonathan Gold, vice president of supply chain and customs policy for the National Retail Federation, told CNBC.
Now a new outbreak of COVID-19 in Southern China adds a new challenges, as China is restricting the number of vessels that can access ports in the area.
What is your take on Home Depot's leasing move? Will shippers fot the bill. Let us know your at the Feedback section below.
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