Ikea is Buying Containers and Chartering Vessels
Shipper and carriers are continuing to seek solutions to address the disruptions and delays in container shipping. Home furnishing retailer Ikea is the latest among the big box stores to admit that decided to take matters into its hands in an attempt to elevate some of the disruptions and global shortages the company has been experiencing. At the same time, reports persist that shipowners, including now the dry bulk sector, are seeking steps to address the challenges in the container shipping business.
Ikea confirmed to U.S. broadcaster NBC News that it had started shipping goods using chartered vessels. The company also reported that it is purchasing containers to ensure the availability of boxes to move merchandise to its stores.
Speaking to the Swedish news outlet Svenska Dagbladet Ikea explained some of the reasons behind its decision to take the costly steps of chartering ships and buying containers. The company said it had shipments delayed by the ongoing port congestion as well as incidents such as the Ever Given that took months to complete its shipments after blocking the Suez Canal and being detained by the Egyptian authorities. Ikea said that shortages of raw materials along with the problems across the global supply chain were leading to shortages and out-of-stock items in its stores.
Moving to take greater control over the shipment of goods Ikea joins a growing list of retailers. In the spring home improvement chain Home Depot was the first to speak publicly about chartering ships. Since then, other major retailers have taken similar steps. Walmart reported that some of its merchants had chartered ships while the discount retail chain in the U.S. and Canada Dollar Tree also reported that it too was chartering ships.
Illustrating the depth of the problem, Dollar Tree told investors that even though it operates under long-term freight contracts it expects its regular carriers “will fulfill only 60 to 65 percent of their commitments.” Even with the chartering of vessels, though, Dollar Tree reported problems have been occurring. One of the company’s chartered vessels was delayed for two months because a crew member tested positive for COVID. “With the current pressure on carriers, once disruptions in the supply chain occur, there is not enough capacity to make it up,” said Mike Witynski, Dollar Tree's President and Chief Executive Officer.
The major carriers have pressed all available capacity into service often adding extra loaders on major routes. However, with capacity still constrained companies have been seeking other solutions. U.S. logistics company Schneider National said it had chartered a general cargo ship not built to carry containers to help customers transport shipments from China to the United States. Now there is increasing talk in shipping circles that the dry bulk companies are looking at deck loading containers on their ships. Insurance groups are warning of the dangers.
“We have in recent weeks heard about dry bulk vessels trying to get certified as box ships, as container vessels. Obviously, allowing them to carry containers,” said Ulrik Andersen CEO of Golden Ocean Group speaking to investors at the end of August. “We're also looking into this possibility. It is too early to say if that happens.”
With no significant increases forecast in the near term for containership capacity, it is likely more shippers and carriers will be looking for opportunities to address the current market constraints.