Image Source: NPR
By: Michael Argenta
October 10, 2021
No matter what, business does not stop. However, this has become a problem as port delays, COVID-19 outbreaks, and worker shortages have slowed world trade from Asia to North America. With Black Friday and the holiday season quickly approaching, major U.S. retailers have had to weigh their options on how to stock their shelves and keep customers happy. After all, no product means no profits.
This predicament has caused mega-retailers Walmart, Costco Wholesale, Home Depot, and Target to take matters into their own hands. Although extremely expensive, each company has decided to charter cargo ships to keep up with demand and sustain revenue. Without chartered ships, products take nearly 80 days to cross the Pacific Ocean; Nearly twice as long as pre-pandemic conditions.
While these chartered vessels are considerably smaller than typical cargo ships, they move smaller amounts of product at a heftier price. Shipbrokers have stated that chartered cargo ships currently fetch $140,000 per day. As expected, several retailers are passing these extra costs onto consumers by upping prices. However, many consumers do not want to miss out on needed items or highly sought-after holiday gifts, so many will continue to buy no matter what.
With increased costs for retailers and consumers due to product shortages and transport issues, it will be interesting to see how smaller businesses stay afloat. Not every company has the means to charter freighters, and even large corporations do not want increased costs to last for long.