Retailers Get Creative Amidst Pre-Holiday Supply-Chain Difficulties

Walmart and Home Depot Charter Their Own Ships

Some of the nation’s biggest retailers from Walmart (WMT) to Home Depot (HD) are taking shipping delays into their own hands, chartering private cargo ships to guarantee that there will be enough toys, electronics, and apparel on store shelves this holiday season.

The holidays are approaching as supply-chain difficulties plague a number of industries. Currently, there are about 250,000 containers stuck at sea waiting to enter US ports. Even when the cargo ships are unloaded, a lack of truck drivers is also leading to longer delivery times. These difficulties could not come at a worse time for retailers. The holiday shopping season is their most profitable period of the year. This year, they are betting that shoppers will be extra eager to buy gifts because of pent-up demand from an unusual holiday season last year.

Chartered Ships Dodge Clogged Ports

Chartered ships which have a lot of cargo space and can avoid container terminals are in high demand among retailers. Many companies are turning to these ships to deliver time-sensitive items such as Christmas decorations. If these products arrive too late, retailers will be forced to sell them at a discount, or may not be able to sell them at all.

Chartered ships are allowing retailers to get around some bottlenecks in the supply chain. For example, the Flying Buttress, a ship which Walmart chartered, was able to bypass the clogged terminals in Los Angeles and unload products at an independent bulk cargo dock 10 days later.

Big Retailers Stand to Win, Small Retailers Could Be in Trouble

Home Depot is also getting creative to ensure that items reach its stores in time for the holidays. To get around the gridlock in the Los Angeles port, the company sent its Great Profit charter ship on a roughly 125-mile journey to San Diego’s port. That enabled the retailer to get Halloween decorations, Christmas lights, and other holiday decorations in stores on time.

While the country’s biggest retailers have the ability to charter private vessels, smaller ones may be out of luck. After all, according to some estimates, of the ships waiting to port, 20% to 25% won’t make it in time for Black Friday, which is the official start of the holiday shopping season. It could be an unhappy holiday for small retailers if supply-chain delays do not ease.

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ABOUT Meg Richardson Meg Richardson is a writer specializing in markets, technology, and personal finance. She loves breaking down seemingly complex ideas and making them readable and interesting for everyone. She holds an MFA in writing from Columbia University. When she is not writing about finance, she enjoys running in Central Park and drawing cartoons.

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