Chinese New Year/ Steamship lines Old Tricks

Chinese New Year will soon be here and for us retailers comes the “thrill” of being able to move out 3 weeks of receipts in 1 week. US Retailers are starting to rebound from 1 ½ years of hard times. Orders at the factories are up and people are beginning to feel better about things. All is good in the world of retail until, our friends at the steamship lines reduce capacity during our time of rebound. As we all know this is “business as usual” for the steamship lines to lower capacity out of China in order to recoup some of the money that they lost in the prior year (I also feel this is a chance to start posturing for the annual rate negotiations). I will admit that this year seems tougher than in prior years, but is this all the steamship lines fault?

My opinion is that we are all masochistic, #1 for being in Retail, but also because all of this pain we feel we put onto ourselves. We push to get the steamship line rates to be as cheap as possible and in doing so, we agree to pay PSS charges and then take it again in the Spring with diminished capacity at our time of need. Why???? Instead of doing all of this, why are we not working with the steamship companies to avoid this pain and help them make their margins? I hate to be the bearer of bad news, but the Steamship lines are going to win against us. They own the vessels and can increase or decrease capacity depending upon how they feel and if they do, what are we going to do about it?

Ocean transportation is the cheapest part of the Supply Chain and it seems to be the place we all spend the most time looking at. I think we blow this out of proportion because it is an EASY way to reduce cost. I agree it is easy, but if we worked a little harder we could save more in the long run by reducing our dependency on 3PL’s which can run us at least 100% more per carton than our ocean costs. Just think of the money you could save by reducing what your 3PL does for you.