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U.S. retailers are struggling to meet demand as rising consumer spending combined with shortages of shipping containers, trucks and warehouse space pushes inventories to historic lows and raises fears about stock levels during the holiday season.
Costco chains in Dollar Tree have warned in recent days that port congestion is increase in transportation costs and lengthening the time it takes to bring goods to the US.
In stores that carried about a month and a half of stock before the pandemic, the proportion of inventories and sales dropped to just 1.1 in March, the lowest level since 1992 at least in the U.S. census office. United States. data show.
“For every 110 TVs that a retailer can have in stock, they sell 100 [each month]. That leaves very little room to have a safety stock, ”said Noah Hoffman, CH Robinson, U.S. vice president of surface transportation.
The logistics company said many retailers had advanced holiday orders from June to April to overcome bottlenecks. Still, consumers can still wait four to six weeks to wait for Christmas e-commerce deliveries, Hoffman added.
With ships from Asia waiting 12 to 15 days to unload and domestic freight carriers like Union Pacific and FedEx speeding up high-season surcharges for months, “we don’t expect inventory to be updated until in early 2022, ”Hoffman said.
Several retailers confirmed the earnings call last week that they had accelerated orders to prevent them from running out of stock.
John Garratt, chief financial officer of Dollar General, said he had “strategically pushed forward” the purchases. The dollar chain store was comfortable with its inventory, he added, but “stocks remain higher than we would like for certain high-demand products.”
Corie Barry, CEO of Best Buy, echoed that “extraordinarily high” consumer demand for electronics retailer’s products had been combined with supply chain disruptions to create “restrictions” on the availability of appliances, computers and televisions.
Costco had been tasked with “front-loading,” Richard Galanti, its chief financial officer, told analysts, noting that delivery times for containers arriving in the U.S., delivering content and returning abroad had doubled. at 50 days.
“The feeling is that this will continue for most of this calendar year,” he said.
Shipping costs are also well above usual levels, with base rates from Asia to the United States ranging from $ 4,000 to $ 5,000 per container compared to $ 1,500 at the same time in 2019, Brian said Whitlock, senior director of Gartner. Some customers pay up to $ 3,000 more to guarantee capacity.
Delays caused by a container ship stranded in the Suez Canal in March exacerbated the fact that the fastest exit from the China pandemic that the U.S. and Europe had left many containers in the wrong places, Whitlock noted.
Jason Hilsenbeck, president of LoadMatch, which coincides with freight and truck loads, said delays in imports were “worse than anyone can remember,” but predicted that consumer demand would decline, easing the crisis. capacity in August.
The West Coast port delay appeared to improve, according to Gartner’s Whitlock, but said the “container imbalance” could continue during the third quarter when retailers usually receive holiday goods.
“We expect 2021 to be a challenging year throughout the Chinese New Year” in February 2022, he said: “The supply chain right now is extremely fragile and I think we are crossing our fingers and hoping we have enough time without more Events “.
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