Containers don’t lie — and currently they tell the unvarnished ugly story of the supply chain bottleneck facing importers. U.S. shippers this holiday season will need more than Rudolph’s red nose to guide them through the whiteout of congestion.
“Obviously, there are options for shippers [transload/ocean charter and airfreight] but the real message is book now or Christmas may be canceled,” said Brian Bourke, chief growth officer of SEKO Logistics.
To illustrate the impact of congestion issues, American Shipper, along with ImportGenius, reviewed Walmart’s summer good imports to gauge the severity of the congestion. Three key categories were broken out: above-ground pools, swimsuits and swim gear, and apparel.
Lori Ann LaRocco breaks down her story on FreightWaves NOW
Walmart is a good example because of its broad diversification of port usage and hundreds of distribution centers.
Bill Simon, former CEO of Walmart, tells American Shipper, “One of the most important aspects of an effective supply chain is the ability to flex the system to adjust for potential disruptions. That’s what makes Walmart distribution world class. They have the ability to adjust, flex or reroute shipments from the port of origin all the way to the stores.”
The timeline chart of Walmart port container volumes shows how the Los Angeles/Long Beach port complex has lost volumes over the years to its Gulf and East Coast competitors.
Simon explained that Walmart’s summer items normally arrive in port during the months of January through March. The product is then moved and stored in distribution centers. The products are then loaded onto store shelves in April or May.
The chart tracking the shipments of above-ground pools for Walmart clearly shows the delay of containers arriving into the nation’s ports. When you compare the May-July 2021 shipments to prior years, there is a distinct increase.
According to U.S. Customs data compiled by ImportGenius, Walmart received more than 18,000 above-ground pools between March and July, with 1,131 14-foot Summer Waves Elite frame pools processed by customs as late as June 20.
“This delay is likely as a result of congestion related to the Yantian port closure,” explained William George, an analyst at ImportGenius.
Simon reviewed the data and told American Shipper, “The delayed pool shipments clearly look unusual. That much product arriving so late can only be caused by delays in manufacturing or shipping.”
Unfortunately, the massive delays at the ports are just one of many supply chain disruptions facing shippers.
“Traditionally, we would have a shipment from China to a U.S. Midwest distribution center completed in 25 to 28 days,” explained Alan Baer, president of OL USA. “Now that same delivery can take upwards of 50 to 70 days. Delivery can be double or even triple the time. This is unfortunate for importers. That extra time costs money for the average importer who has a set window to sell their product.
“The advantage Walmart has over its competitors is its scale,” Baer added. “Even with the pools arriving late, Walmart has the ability to reroute those pools to sell them in their Southern stores. But for the little pool guys who also have overdue deliveries, they don’t have that ability. If you are a pool seller in Columbus, Ohio, no one is going to buy that pool in August unless at a massive discount.”
The same logistics strategy will also aid Walmart in the delivery and sale of late-arriving swimsuits and swim gear. The volumes in May and June of 2021 outpaced the prior years during those same months.
“Walmart’s imports of swimsuits and swim gear from 2015-2020 show a clear, cyclical pattern of stocking for the summer season beginning in January and extending through April,” said George. “Their import volumes for May and June of 2021 are stark outliers and show that while Walmart managed to import a substantial amount of their intended inventory in this category on time, a combination of high demand and congestion impacted their ability to fully prepare for the summer in advance.”
Shipments of apparel and garments are also at historic highs for Walmart. Some products listed on the bills of lading include pajamas, jogger pants, women’s spandex woven trousers and boys relaxed-fit stretch jeans.
American Shipper reached out to Walmart for comment but received no response.
C.H. Robinson, the largest non-vessel-owning importer of goods from China to the U.S., told American Shipper that its peak season volumes started early.
“We’ve been in the thick of an early peak shipping season for U.S. retailers since April,” explained Noah Hoffman, C.H. Robinson’s retail expert and vice president of North American Surface Transportation. “Some of our 7,500 retail customers started placing orders back then to mitigate shipping delays from their manufacturers in Asia.”
Hoffman said that presently, all the top 25 U.S. retailers are pulling inventory forward and are ordering much larger amounts than normal in hopes of at least a fraction of it arriving in time for the holidays.
“Our priority has been to help our customers replenish current stock, fill shelves for back-to-school shopping and bring in enough holiday inventory,” said Hoffman. “We’re leveraging our analytics and real-time visibility technology to help our customers prioritize their freight, spread shipments out and do mode conversions.”
A FedEx representative told American Shipper, “The ocean freight holiday peak shipping season started ramping up in June this year, about two months earlier than usual. We continue to see more and more U.S. retail importers advancing purchase orders and factory production by as much as six to eight weeks.”
SEKO Logistics sent out an advisory to customers urging Midwest and East Coast shippers to have their containers shipped no later than Aug. 21 so they are on store shelves by Nov. 1.
“We shared key dates to make sure they are aware that time is running out to get stock in store in the U.S. and Europe in time for Christmas,” said SEKO’s Bourke. “According to the checklist, from a shipping perspective, the dates are three to four weeks earlier than would be expected in a more normal market and some eight weeks earlier from a capacity booking perspective.”
SEKO is not alone in being cautious.
In an email to clients, Jon Monroe of Monroe Consulting warned of a repeat of what some shippers saw last holiday season — Christmas in January.
“There are cases of companies importing product with a total transit (until it arrives in the warehouse) exceeding 100 days. This might seem extreme, but not really. Take a look at your orders and calculate the time an order takes from the cargo-ready date to in-distribution center date.
“It takes you weeks to prebook, weeks to get on a vessel, weeks to get to the terminal after waiting for a berth and if it is an interior point Intermodal shipment, it could possibly take many weeks to get to the destination. If your destination is Chicago, it takes weeks to get your cargo off the terminal.”
The logistics commentary supports a benchmark survey conducted by the National Retail Federation in June. It asked members about the ongoing congestion issues, as well as peak season.
“A majority of the members who responded noted that they have added more than three weeks to their supply chains,” explained Jon Gold, NRF’s vice president of supply chain and customs policy. “Over 70% of respondents indicated that they would be moving up shipments for peak season to July, August and September, with August potentially being the busiest month.
“We need to find solutions now to address the issues in the short-term but also create more resilient supply chains for the future. The port congestion issues that we are facing are systemic and were here before the pandemic.”