Source: New York Times

According to a July 26th article in the New York Times, freight rates for retailers have doubled and in some cases tripled since 2009, due mainly to the shortage of container space that has also caused late shipments. With retail sales weak and consumer confidence diminishing, the shipping problems have become a huge issue for retailers and suppliers.

During the 2009 recession, stores experienced lower demand, and in response, cut their inventories. With the need for capacity diminished, ocean carriers took ships out of service and moved to “slow steaming” while companies producing containers simply stopped making them. Today, retailers are scheduling items to arrive earlier than needed in stores, in direct response to the shipping issues. Though this means higher shipping costs than usual, retailers are attempting to avoid the risk of losing sales if inventory is late. Slowly and with hesitation, ships are being added back into the system, leading to concern that rates will fall again when there is an abundance of capacity.

Source: The Journal of Commerce

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