Walmart Merchants Charter Ships to Get Inventory to US Stores

Walmart told investors during its quarterly update that they are taking proactive steps to manage inventory, including transporting merchandise on chartered vessels in order to manage the current challenges in the supply chain. The largest brick-and-mortar retailer - with more than 4,700 stores in the U.S. alone - described to investors steps taken to manage inventory.

“We continue to monitor industry trends related to transit and port delays,” said Brett Biggs, Vice President and Chief Financial Officer of Walmart during the quarterly investor conference call. “Our merchants continue to take steps to mitigate challenges, including adding extra lead time to orders and chartering vessels specifically for Walmart goods.”

Like most major retailers Walmart reports that it has been challenged by the disruptions in the supply chain, but Walmart believes it is well-positioned with merchandise through these efforts going into the third and fourth quarter, which are typically busy for retailers. However, Biggs did tell investors that “Out-of-stocks in certain general merchandise categories are running above normal, given strong sales and supply constraints.”

Ask about the retailer’s efforts at inventory management, the president of Walmart US John Furner reported that the company “finished the quarter up about 20 percent in inventory, which I think means we're well-positioned going into the rest of the year based on where the inventory is.” 

The company also reminded investors that it said earlier this year that it would be increasing capital spending with a heavy emphasis on the supply chain in the coming years. “These investments are aimed at increasing assortment to broaden our appeal with customers and get product positioned and picked efficiently, to deliver it faster,” said President and CEO Doug McMillon 

News of Walmart’s efforts to manage the supply chain and inventory levels comes as ports especially in the United States are dealing with what they see as a new normal in the level of import volumes.  “This remarkable, sustained import surge is pushing the supply chain to new levels,” said Port of Los Angeles Executive Director Gene Seroka discussing the port’s recent volumes. “With space tight at warehouses, rail yards, and container terminals as we enter the traditional peak shipping season, we are offering new data tools and incentives to help improve throughput and efficiencies. Additional strategies are being developed in conjunction with both the private sector and federal government.”

Walmart also is not the first big-box retailer to take matters into its own hands to address the shortage of capacity for container shipping. In June, Home Depot President and Chief Operating Officer Ted Decker described to CNBC the usual steps the company was taking to maintain its merchandise inventories and get products on the shelves during the disruptions to the global supply chain. He said Home Depot had chartered a ship that was sailing between China and U.S. dedicated to the home improvement retailer. This was on top of having used air freight and buying products in the open market.

Smaller retailers and manufacturers, however, have not been able to take advantage of these options. They continue to complain to the Federal Maritime Commission about the problems and the need to better manage the carriers and ports to ensure the flow of merchandise.