Walmart and Target are chartering their own ships to avoid a holiday season supply chain disaster, and it's really expensive. “If you’re a mid-size retailer or emerging fashion brand, you can’t rent your own ship.”
With supply chain channels snarled by the effects of the COVID-19 pandemic, major retailers like Target Corp. and Home Depot Inc. are taking matters into their own hands, chartering ships to deliver goods in time for the important holiday season.
The cost to lease a ship runs from about $1 million to $2 million per month, according to Zimmerman, plus operating costs, including the cost of renting the containers, which can run in the hundreds of dollars. The biggest retailers are using between 500 and 1,500 containers per month. Still, for these eye-popping prices and a lot of risk, companies that are chartering a ship now have a say on where it’s going, giving the company the flexibility to bypass clogged ports and other systems.
“We… chartered our own container ship to regularly bring Target merchandise from overseas ports to the U.S. As co-managers of the ship, we can avoid delays from additional stops and steer clear of particularly backed-up ports,” the company wrote in a blog post published on its site last month.Home Depot Inc.’s HD, +2.16% Chief Operating Officer Ted Decker said the company came up with a “creative solution” to its problems with getting goods.
“Every ship can carry 800 to 1,000 containers at a time and will make approximately 10 deliveries during the course of the next year,” said Richard Galanti, Costco’s chief financial officer, on the fiscal fourth-quarter earnings call in late September, according to a FactSet transcript. Data from Ware2Go, a United Parcel Service Inc. UPS, +0.50% company that specializes in one-and two-day delivery, says 63.2% of merchants ordered their holiday inventory by August, 44.4% ordered more than usual, and 43.3% ordered earlier than usual. Still, nearly 20% of merchants say they’re unsure that items will arrive in time for peak season.
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