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What Two Transporters Gained Ground During Shipping Shock

The challenging freight environment pushed some big names to make big changes in their long-term planning.

Two retailers, Walmart Inc. and The TJX Cos. Inc., have revamped their freight strategies, according to Eric Oak, researcher at Panjiva, a part of S&P Global Inc. through its S&P Global Market Intelligence division.

When TJX posted its second-quarter earnings report on Aug. 18, CEO Ernie Herrman told Wall Street analysts during a conference call that supply-chain constraints were driving TJX buyers to place their orders earlier and with longer lead times. Chief financial officer Scott Goldenberg said in the same call that he expects intermodal transportation costs for trucking and ocean freight to continue climbing this year, noting that in some cases freight rates have skyrocketed 200 percent.

What Oak found via Panjiva’s tracking and proprietary database was that TJX consolidated its logistics providers as a way to deal with the supply chain disruptions.

“Before the pandemic, TJX’s largest carriers were MSC Mediterranean Shipping Co. SA, CMA CGM SA and A.P. Møller-Maersk A/S, which accounted for 16.6 percent, 11.9 percent, and 26 percent of volume, respectively, in the three months to July 31, 2019,” Oak said. But when lockdowns started to lift in mid-2020, the Panjiva researcher said the off-price retailer began sending “significantly more volume through Maersk.”

That volume was about 42 percent of the total in the same three months in 2021. And as more volume was being handled by Maersk, the corresponding volume handled by MSC and CMA fell to 10.5 percent and 5.78 percent, respectively.

While the shift was likely a boon for Maersk, Oak said “consolidating volume on TJX’s side may have given the company an additional push when trying to get its shipments through.”

At Walmart, which posted its second-quarter report on Aug. 17,  chief financial officer Brett Biggs said the discounter was keeping close tabs on supply-chain and shipping delays. He also said one way to mitigate the challenge was the addition of extra lead times.

But Walmart also took a page out of Home Depot‘s playbook, which involved the chartering of vessels working solely with the retailer to avoid out-of-stocks in the critical third and fourth quarters, Biggs said.

Oak said that Panjiva data show there were “245,000 twenty-foot equivalent units of U.S. seaborne imports linked to Walmart in the past 12 months, handled predominantly by CMA CGM SA” as the retailer navigated the tight capacity environment. “Walmart also may have hit congestion in mainland China, with growth in volumes from the region falling to 2.5 percent year over year in July from 64 percent year over year in the second quarter,” he noted.

Oak also noted that Panjiva’s data indicates that Vietnam has benefited from sourcing shifts, with retail-related imports from the country up 86.5 percent year-over-year in the second quarter and the share of imports rising to 9.6 percent in July from 8.3 percent in the second quarter. Chinese retail imports remained “relatively stable,” with their share rising by 0.2 percentage points from the second quarter, although July imports fell 2.6 percent year-over-year.

“Vietnamese and Chinese imports will likely face further changes as the impact of factory closures and congestion in the two countries work their way down supply chains,” Oak concluded.

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