Logistic Co. Joins Retailers Chartering Cargo Ships to Move Containers
As the well-publicized pressures continue to grow on the supply chain creating disruptions across the container shipping segment, more companies are turning to the charter market as a tool to manage their shipments. In addition to retailers, a large U.S. logistics company has also begun chartering vessels to help its customers. and in a usual step, it is chartering general cargo ships to move the containers from China to the U.S.
Schneider National, a Green Bay, Wisconsin-based logistic company, described to The Wall Street Journal the depths of its efforts to help customers get their shipments across the Pacific from China. The company reported that the first of several chartered vessels arrived in Portland, Oregon on August 26 carrying approximately 200 containers for customers that will then be dispatched inland mostly by train. Schneider said it plans to deliver at least 2,500 containers with its charters with many of the boxes destined to the U.S. east coast.
"We're hearing from many of our customers that they're significantly behind in their shipping. They're looking for any solution," Jim Filter, Schneider's chief commercial officer and senior vice president of Schneider told The Wall Street Journal.
Due to the lack of space and predictability in the normal container markets, Schneider began looking for solutions for its customers and came up with a unique option. With it nearly impossible to find containerships, the logistics company instead agreed with Germany’s Schulte & Bruns, an operator of general dry cargo and multipurpose ships that normally transport bulk cargo as well as large loads such as wind turbine blades.
"We've never put our containers on a vessel this small before," Filter told The Wall Street Journal. The company however is proud to report that found a creative solution to help its customers' transport products ranging from electronics to clothing to the U.S. In addition, the vessels are able to avoid the more congested ports speeding up the logistic process for customers that are growing desperate due to the delays.
Retailer Dollar Tree, which operates nearly 16,000 retail stores in the U.S. and Canada, outlined to investors on its quarterly call yesterday just how difficult shipping has become in its business. The company, which imports nearly 90,000 40-foot containers a year, highlighted not only the record high freight rates but also shortfalls in capacity and elongated delivery times.
“After the first quarter of 2021, our updated freight outlook assumed that our regular ocean carriers would fulfill only 85 percent of our contractual commitments,” said CEO Mike Witynski on the company’s quarterly investor conference call. “However, we are now projecting that our regular carriers will fulfill only 60 to 65 percent of their commitments.”
He said that he had heard from freight forwarder that the transit times from Shanghai to Chicago have more than doubled from 35 to 73 days. Other executives he reported estimated that voyages are now taking 30 days longer than in previous years due to port congestion, container handling delays, and other factors.
For the first time, the retailer said it is using dedicated space on chartered vessels. This includes one large vessel contracted for three years, which is scheduled to make its first voyage within weeks. Dollar Tree is expecting to add more charters this year.
Dollar Tree reports that it is not expecting “material improvements” in ocean shipping capacity in 2022 and definitely not in the first part of next year. CEO Witynski forecast it would possibly not be till 2023 ocean capacities improved and the retail would experience a return to more normal shipping patterns.