U.S. Retail Giants Charter Private Vessels to Skirt Port Delays

Big box stores choose to hire private ships to get products to consumers at a higher cost for all. 

October 12, 2021

Cargo Ship

ALEXANDRIA, Va.—Walmart, Home Depot, Costco and Target are chartering their own cargo ships in order to stock shelves, reports the Wall Street Journal. Supply chain delay across the world are so delayed that the companies are taking this extreme and costly measure, and some are passing the added cost onto the consumer.

Supply chain issues stem from port delays, COVID-19 outbreaks and labor shortages. Everything from holiday decorations and toys to appliances and furniture risk out of stocks or low stocks. It’s taking 80 days, or twice as long, to transport supplies from Asia to North America. In particular, Southern California are especially backlogged, with some container ships waiting two weeks or longer to dock, the Washington Post reports.

“Global supply chains are not built for this,” Brian Bourke, chief growth officer at SEKO Logistics, told the Washington Post. “Everything is breaking down.”

The own-chartered ships allow retailers to enter less congested ports, such as Portland, Ore., Oakland, Calif., or the East Coast. The ships are not as large as typical cargo ships, such as Maersk, and can hold around 1,000 containers, but they are on average nearly twice as expensive as the cost of moving cargo on a typical 20,000-container vessel.

Home Depot is using its chartered ships to transport plumbing supplies, power tools, holiday décor, heaters and among other items, but the products moving on the chartered ships are only a small percentage of the home improvement store’s overall import volume. However, even the small amount of control over shipments allows the store to give priority to the most in-demand products.

“It was almost started I think as a joke,” Sarah Galica, vice president of transportation at Home Depot, told the Wall Street Journal. “Let’s just charter a ship.”

Walmart isn’t a stranger to hiring ships, as it did this during the 2012 Los Angeles port strikes. Walmart is avoiding crowded ports like Los Angeles, Houston and Savannah, and using less busy ports, such as Mobile, and is even sending its own employees to the docks to facilitate landings.

Dollar Tree is getting in on the chartered ship game, too, with the company is securing dedicated space on chartered vessels for the first time. The 16,000-store company plans to add more charters this year, as well as source more products domestically and internationally that don’t rely on trans-Pacific routes. Dollar Tree announced that it will begin selling items above $1, showing that the discount retailer is growing out of its price model with the need to account for increased wages and the disrupted supply chain.

Labor shortages, in particular truck driver shortages, have exacerbated supply chain issues in the U.S. and abroad. Trucking firms are offering sign-on and retention bonuses to attract and retain drivers. The labor crunch has firms raising wages and turning down jobs because they can’t meet the demand.