Shipping Problems Via Canals
For different reasons, two major waterways crucial to international merchandise sourcing are experiencing major constraints, roughly halving their import flows. The Red Sea/Suez Canal route is due to Houthi Rebels. The Panama Canal is due to local severe drought restricting the number of ships through the canal. This is a major challenge for retailers. Many receipts will be two weeks or more late. There may be cases where retailers are still waiting for January sale or even early Spring goods. Some will face a decision about whether to send seasonal items to stores when they do arrive. The markdowns needed to clear the goods in a much shortened season may temp some retailers not to issue them to stores, just to return them to warehouses unsold a few weeks later. However, interest rates make it very expensive to keep them in the warehouse for a year or so before they can go on sale again. A difficult dilemma for highly seasonal or trend right items that might not be on trend a year from now.
This may be a trigger that encourages more retailers to invest in supply chain control tower and markdown modelling technology to increase supply chain visibility and make choosing the optimal decision easier and less risky, though no pain is not an option.
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Posted by Brian Hume
22nd December 2023
