September 20, 2018

U.S. Retail - Shipping Trends

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By Sabrina Bullock
Recent talks about tariff increases along with higher costs for overseas shipping and domestic trucking delays have sparked cost concerns among vendors, some of whom have pushed up shipping times for holiday goods.

Five vendors to the mid-tier channel and one retail brand manager commented on the recent changes in the shipping landscape, both domestically and internationally. Concerns about imposed tariffs have caused some retailers to push up shipping times to receive goods from China ahead of any changes. Vendors also said international carriers are charging higher shipping rates and experiencing longer shipping times as a result of fewer ships, greater volumes and rising diesel costs. Meanwhile, because of the well-known domestic truck driver shortage (which sources say is progressively getting worse), sources noted some retailers have scheduled for earlier deliveries than previously planned.

Tariffs
“Tariffs are looming, and everyone thinks it's going to be a problem, so everyone is trying to ship early. Retailers will potentially end up with too much inventory on hand.”

“Private label is produced on their own by retailers -- they have to pay for it all. Tariffs will affect the cost of retailers to do private brands. In the short term, retailers will take the private goods, but we expect they’ll suddenly start moving back to manufacturers.” 

“With tariffs, more manufacturers will be heading to places like Vietnam, but the labor force isn’t as skilled.”

“If the tariff hits, we can’t get around the costs.”

“Ahead of the tariffs, some of the larger retailers are trying to bring in as much pre-tariff merchandise as possible to control potential costs and also to make sure they're stocked for Black Friday. Some of them want it right now -- in fact some are telling China, ‘Don't even bother delivering it, we want it all now so we'll come and get it.' All the bigs like Walmart [Inc.], Home Depot [Inc.] and Lowe's [Cos. Inc.] have offices there anyway, so it's not like they have to start from scratch. The manufacturers are balking because they want control of their goods on U.S. soil so they can distribute them the way they want.”

Overseas Shipping
“Shipping costs are definitely going up. Everything is going up in China along with tariff costs.”

“There is a Thailand vessel shortage. It’s pushing out estimated delivery dates.”

“There is a backlog of shipments, both from weather events and from the talks about tariffs. The cost of air freight is also up along with shipping costs.”

“Shipping companies had a lot of ships a few years ago; now, they are docking ships. There are only six major companies now and they took ships out of circulation, which created more demand. There is limited space and like a 50% surcharge on peak usage time, which is pretty much all the time and on any seasonal-type item. Bookings are now a few weeks out versus a shorter time. Nothing [on delivery times] is guaranteed, though, and they can just push it out longer.”

“As far as holiday impact with slower shipping, we think our stuff will be here in September, but we’re not sure.”

“International shipping is being slowed down to save on diesel. It used to take 14-16 days; now, we don’t know how long it’ll take.” 

Trucking
“There is a trucking shortage. We are reserving trucks now [earlier yy] for the fourth quarter. Amazon[.com Inc.], Macy’s [Inc.] and Walmart have all scheduled earlier.”

“Shortages are happening more this year. Trucks are backed up, more so than previously.”

Contributors: Robin Macleod

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