SCD: Retail's new fad? Charter ships to ensure sales, even if it's costly.

SUPPLY CHAIN DIVE reports:

Container ship charter rates are at all-time highs, but companies are still pursuing charters because the alternative is worse.

Extreme times call for extreme measures, Descartes Systems Group CEO Edward Ryan said in his assessment of the global supply chain on a recent earnings call. With shipping capacity limited and demand high, shippers are securing what space they can find, and holding on to it as long as feasible.

In some cases, that means leasing an entire ship.

“We’ve seen shippers like Home Depot buy their own ships just to get that capacity and we’ve seen other companies doing the same in air,” Ryan said on the logistics technology provider’s Q2 call. “Ikea is buying its own shipping containers and chartering ships to help with their shipments.”

The Home Depot and Ikea are among the retailers looking to exercise greater control over their supply chains and get their products into the U.S. on time for the holidays by chartering their own ships. This is not a typical move in the retail playbook, but high freight rates, limited capacity and delayed shipments are creating “the perfect storm” for these companies, said Ricardo Ungo, director of Old Dominion University’s Maritime, Ports, and Logistics Institute.

“Even if they’re paying more, they’re still not getting the goods on time,” Ungo said. “It makes sense to try to take control of the delivery, and that’s why the big companies are taking steps to charter those vessels…”

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