pandemic has triggered a spike in international shipping rates that risks
impacting Christmas sales and the global economy.
The capacity to
move cargo from China to the U.S. has decreased due to a decline in the number
of container ships making runs. As a result, shipping rates are surging.
The voyage from China to the U.S. West Coast takes around three weeks
The voyage from
China to the U.S. West Coast takes around three weeks. The lengthy trip tends
to create a demand spike for space on container ships heading in that direction
from July through October, when U.S. retailers prepare for Black Friday.
Day after America’s Thanksgiving holiday the country’s busiest
The day after
America’s Thanksgiving holiday has the reputation of being the country’s
busiest shopping day. Traditionally, it is the day many retailers move into the
black for the year, thus the name.
This year, Black Friday lands on Nov. 27.
Freightos, a cargo information company, the shipping rate for a 40-foot
container in late September reached $3,900, an all-time high and almost three
times more than the rate of 12 months earlier.
The surge is due
to shipping companies that responded to the pandemic by cutting back on voyages.
In May, the number of voyages was around 20% fewer than what had been planned
before the pandemic.
U.S. stores are already running low on supplies
U.S. stores are
already running low on supplies. In July, their inventories were down more than
10% year-on-year as the inventories-to-sales ratio fell to 1.23, its lowest
reading since 1992. The shipping industry’s shrunken capacity now has these
merchants struggling to purchase goods and fill their shelves.
Many retailers considering extending discount campaigns through the
end of the year
In some areas of
the U.S., big-box chain stores like Best Buy and Home Depot have sold out of
dishwashers, microwave ovens and refrigerators. The work-from-home trend has
caused demand for home appliances to increase, but orders can take a few months
to arrive. Given the shortages, many retailers are considering extending
discount campaigns through the end of the year. Extending sales periods would
also help stores to deter crowds and maintain social distancing standards.