As the pressure on the supply chain continues to increase, leading to the interruption of the entire container transportation chain, more and more companies are beginning to use chartering as a tool to manage their freight. In addition to retailers (Walmart, HomeDepot, Amazon and other retail giants have all made money to rent ships on their own), a large American logistics company has also started chartering ships to help customers. It rents general cargo ships to transport containers from China to the United States. Retailer Dollar Tree also rents vessels to cope with soaring freight costs and extreme delays, and is pessimistic about the shipping market before 2023.
Schneider National, a Wisconsin-based logistics company, described to The Wall Street Journal the company's tremendous efforts to help customers ship goods from China to the other side of the Pacific. The company reported that on August 26, the first few chartered ships arrived in Portland, Oregon, with about 200 containers on board, and they were then transported mainly inland by train. Schneider said it plans to use chartered vessels to transport at least 2,500 containers, many of which are destined for the east coast of the United States.
Jim Filter, Chief Commercial Officer and Senior Vice President of Schneider, said: "Many customers have reported that they are clearly behind the delivery schedule and are looking for any solutions."
Due to the lack of predictability in the general container market, Schneider began to find solutions for its customers and proposed unique options. Since it was almost impossible to find a container ship, the logistics company turned to Schulte & Bruns in Germany to reach an agreement. Schulte & Bruns is a company operating general dry cargo and multi-purpose ships, often transporting bulk cargo, as well as bulk cargo such as wind turbine blades.
Filter told the Wall Street Journal: "We have never transported containers in such a small ship before." However, the company proudly stated that it has found a creative solution to help its customers in everything from electronics to clothing. Ship to the United States. In addition, these ships can avoid more congested ports, thus speeding up the logistics process for customers who have become desperate due to delays.
Dollar Tree, a retailer that operates nearly 16,000 retail stores in the United States and Canada, outlined to investors the difficulty of transportation in its business during a recent quarterly conference call. This company, which imports nearly 90,000 40-foot containers every year, not only emphasized record high freight rates, but also emphasized insufficient capacity and extended delivery times.
The company's CEO Mike Witynski said on the quarterly investor conference call: "After the first quarter of 2021, we have updated our freight outlook, assuming that our regular ocean carriers will only fulfill 85% of contractual commitments. However, we It is now expected that conventional ocean carriers will only fulfill 60% to 65% of their commitments."
Mike Witynski said the transit time from Shanghai to Chicago more than doubled from 35 days to 73 days. Due to port congestion, container handling delays and other factors, the current voyage time is 30 days longer than in previous years. The retailer said for the first time that it will use dedicated space on chartered vessels. This includes a large ship with a three-year contract and plans to make its first voyage within a few weeks. Dollar Tree expects to add more charter contracts this year.
In the earnings conference call on August 26, Dollar Tree CEO Mike Witynski said that in a recent case, Dollar Tree had a dedicated charter ship returning from a Chinese port because a crew member tested positive. The voyage was delayed for two months because the ship had to go to Indonesia and replace all crew members. Compared with other large retailers, Dollar Tree needs to import more containers for every $100 million in sales. The company relies on a steady stream of cheap goods to make a profit. Freight costs and demurrage have a huge impact on its profits.
The Dollar Tree report stated that there will be no "substantial improvement" in shipping capacity in 2022, and certainly not in the first half of next year. CEO Witynski predicts that it may not be until 2023 that shipping capacity is improved before retail can return to a more normal mode of transportation.