by Michael Gallaway, Dallas County Community College, Northlake
"As congestion chokes ocean carrier service, some shippers are taking matters into their own hands.
One of America’s largest retailers, Home Depot (NYSE: HD), has just reserved a ship for its sole use. The move underscores just how tight trans-Pacific capacity has become and how worried retailers are about getting goods on shelves at any cost.
In an article published Sunday, CNBC interviewed Home Depot President Ted Decker, who said that the ship will exclusively carry Home Depot cargo, will begin service in July, and was employed because consumer demand caught Home Depot by surprise.
A Home Depot spokesperson confirmed the CNBC report but declined to offer additional details to American Shipper, such as the ship’s name, the duration of its use and whether Home Depot is working with a freight forwarder intermediary.
A company the size of Home Depot has high-volume long-term contracts with ocean carriers at lower rates than smaller shippers. However, carriers have been unable to fully meet contract commitments due to extreme congestion, and simultaneously, retail inventory-to-sales ratios remain historically low. Home Depot’s decision confirms that costly workarounds are now on the table.
“This strikes me as an extreme scenario,” said Simon Sundboell, founder of maritime intelligence platform eeSea. “I cannot imagine it is a larger ship, because there aren’t any available, so you’re not looking to compete on slot costs. You’re just looking very, very short term at getting the boxes you need into your warehouses.”More information at https://www.freightwaves.com/news/home-depot-now-has-its-own-ship-thats-an-ominous-sign "