U.S. retailers are eager to secure holiday inventory

U.S. retailers are struggling to meet demand due to the surge in consumer spending, coupled with shortages of shipping containers, trucks and warehouse space, which has reduced inventories to historically low levels and raised concerns about inventory levels during the holiday season.

Chain stores from Costco to Dollar Tree have recently warned that port congestion is Increase freight costs And it extends the time to ship the goods to the United States.

Before the U.S. pandemic, the inventory-to-sales ratio of stores with approximately one and a half months of inventory dropped to 1.1 in March, the lowest level since 1992. The U.S. Census Bureau data Performance.

“Retailers may sell 100 for every 110 TVs they sell. [each month]. Said Noah Hoffman, vice president of North American Ground Transportation at CH Robinson.

The logistics company said that many retailers have postponed holiday orders from June to April to overcome bottlenecks. Hoffman added that, however, consumers may still have to wait four to six weeks for Christmas delivery.

Hoffman said that as Asian ships wait 12 to 15 days for unloading, and domestic freight companies such as Union Pacific and FedEx increase peak season surcharges for several months, “we don’t expect stocks to increase by the beginning of 2022.”

Several retailers confirmed on their earnings conference call last week that they accelerated orders to avoid insufficient inventory.

John Garratt, the chief financial officer of Dollar General, said it “spurred strategically” the purchase. He added that the dollar chain stores are satisfied with their inventory, but “out of stock is still higher than the prices of certain high-demand products.”

Corie Barry, CEO of Best Buy, responded that the combination of consumer demand for e-retailers’ products with “extraordinarily high” supply chain disruptions has caused “the availability of home appliances, computers and televisions”. Constraint”.

Richard Galanti, Costco’s chief financial officer, told analysts that Costco has been “loading” orders in advance, noting that the turnaround time for containers to arrive in the United States, transport their items and return overseas has doubled , Up to 50 days.

He said: “It feels like it will continue for most of this calendar year.”

Brian Whitlock, senior director of Gartner, said that transportation costs are also much higher than usual. The basic freight from Asia to the United States is US$4,000 to US$5,000 per container, compared to US$1,500 in the same period in 2019. Some customers pay up to $3,000 on this basis to guarantee capacity.

Whitlock pointed out that the delay caused by container ships that stranded on the Suez Canal in March has exacerbated the fact that China is evacuating the pandemic faster than the United States and Europe, which has caused many containers to park in the wrong place.

Jason Hilsenbeck, president of LoadMatch, which is responsible for freight and truck transportation, said import delays are “worse than anyone remembers”, but he predicts that consumer demand will weaken and the capacity contraction will be eased by August Situation.

Gartner’s Whitlock agreed that the backlog of West Coast ports is improving, but he said that the “container imbalance” may continue into the third quarter, when retailers usually receive holiday goods.

He said: “We expect 2021 to be a challenging year during the entire Lunar New Year.” He said: “The current supply chain is very fragile. I think we will do our best and hope we can have enough time without any Significance. Event.”

Source link