Saving Christmas: Target, Home Depot, Walmart and Other Large Retailers Trying to Beat Us Supply Chain Crunch

Major retailers like Target and Home Depot have elected to charter their ships to deliver billions of dollars worth of goods in time for the holiday season, amid an unprecedented supply-chain crisis in the US.

“As co-managers of the ship, we can avoid delays from additional stops and steer clear of particularly backed-up ports,” Target – the second-largest U.S. importer behind Walmart – said in a statement released in September.

Similarly, Home Depot Inc.’s Chief Operating Officer Ted Decker said the company came up with a ‘creative solution’ to its problems with getting goods back in August.

“Our supply chain teams recently leveraged our scale and flexibility to arrange for several container vessels for our exclusive use,” he said during the company’s second-quarter earnings report. 

The decision comes as bottlenecks along the country’s East and West coasts continue to hinder the transportation of products from overseas to countless stores across the nation, causing a backlog of billions of dollars of toys, clothing, electronics, vehicles, and furniture.

As the holidays rapidly approach, the demand for consumer goods is at an all-time high – with ships often facing shocking wait times of up to four weeks to unload their all-important hauls.

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With demand increasing at such a rate, ports are not able to handle the stream of goods coming in, especially with reduced manpower caused by regulation constraints put on them and losses experienced during the pandemic.  

These back-ups at the ports then inevitably affect the intricate network of railways and trucking routes that transport these products, creating unprecedented levels of congestion. 

Complications that have arisen since the pandemic have also spurred manufacturing shutdowns overseas and incurred other high costs related to transporting merchandise. 

Dollar Tree Inc., a discount store chain based in Virginia, for example, said that one ship carrying the company’s cargo recently was delayed for two months after a crew member tested positive. 

Now, a host of these fed-up big-box retailers – including Target, Home Depot, Walmart, and Costco – are taking matters into their own hands, utilizing their deep pockets to charter their private ships to transport goods in a more timely fashion.

Costco has chartered three ships to move items to the U.S. and Canada from Asia in several thousand containers.

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‘Every ship can carry 800 to 1,000 containers at a time and will make approximately 10 deliveries during the next year,’ said Richard Galanti, Costco’s chief financial officer, on the fiscal fourth-quarter earnings call in late September.

Ports in Los Angeles and Long Beach – the two most popular shipping destinations in the US – are currently housing dozens of vessels that have been left anchored for weeks.

However, even if these privately contracted ships avoid the US’ most popular ports of call – like those in Long Beach and Los Angeles, which currently house dozens of vessels that have been left anchored for weeks  – they will likely encounter similar congestion at a slew of seaports across the country, as countless container ships also flock to a backup destination’s along the nation’s West Coast, in cities like Seattle and Tacoma, or along the East Coast, to compensate.   

These contingency stations littering the coast also face similar wait times.

‘Goods have been shifting to other ports, with imports through the ports of Seattle and Tacoma up 40.6% versus 2019 and imports through East Coast ports up 36.1% in the same period,’ said Panjiva, the supply chain research unit of S&P Global Market Intelligence, in a recent report. 

A multitude of ocean ports along the Pacific and Southern Atlantic coast, as well as those in New York and New Jersey, are also experiencing backlogs because of a new influx of traffic.

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