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 ...
Taiwanese hardware maker and household goods retailer Test Rite International is following in the footsteps of compatriot Taiwan Semiconductor Manufacturing Corp (TSMC) by chartering its own containership to avoid sky-high freight costs.
In a recent interview with Taiwan’s Apple Daily, Test Rite president Tony Ho said that, amid Covid-19-related supply chain disruption, container freight rates had reached astronomically high levels.
He said trade activities had recovered from the pandemic, and Test Rite’s net profit for the first six months of this year increased seven-fold, year on year, to $28.31m.
He said: “If we’re to maintain our earnings, we have to control our shipping costs. Previously, it cost just around $1,000 to ship a container to the US. Today, it is at least $20,000. The tight supply of shipping slots and containers is a very serious problem, and we’re discussing with our partners to book a whole containership.”
Late last month, TSMC’s management was reported to be negotiating with local liner operators to charter a vessel to bring construction components to its new plant in Phoenix, Arizona. Other retailers that have done so include Home Depot, Walmart and Ikea.
Mr Ho added that the pandemic had generated demand for infection-prevention products, such as masks and gloves, and Test Rite had diversified into producing these to meet demand from European and US customers.
He said: “The shortage of ships and containers is so acute that our goods have been arriving late, by one to two months, especially on the US west coast, where ports are severely congested.”