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Logistics Make Front Page Headlines

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Hanjin Shipping Troubles and Seasonal Short Term Worker Shortage Leave Lots to Ponder Entering the Holiday Season

By: Andrew Tananbaum

According to Wall Street Journal, “95% of the world’s manufactured goods—from dresses to televisions—are transported in shipping containers.” While this is not news to you, last week, logistics took center stage in the WSJ. First, the paper reported that as much as $14 billion in cargo is being trapped at sea due to Hanjin Shipping’s recent bankruptcy filings. Ports are denying access because they are concerned they won’t get paid their fees. As a result millions of pieces of consumer’s goods are floating out in the ocean, while the companies that own the inventory scramble to make plans to retrieve what is rightfully theirs.

From our perspective, we don’t think the Hanjin situation will impact most suppliers / importers, since, most goods for the holiday season either already have or are currently making their U.S. arrivals. However, if Hanjin stops sailing suppliers should be cautious that other shipping companies may take advantage of decrease in capacity and increase in demand for shipping services, and charge either higher fees or increased surcharges. Given razor thin margins for retailers and suppliers, this is something to monitor.

On the other end of the spectrum – discussing the logistics required to deliver consumer orders this holiday season – the WSJ also reported that companies like Wal-Mart, Amazon, UPS and FedEx are starting to recruit seasonal workers earlier this year, to better prepare for the surge in online shopping. While retailers and shipping companies typically begin to prepare for this in October, many have moved up their efforts to combat the lower unemployment rates, making it harder to find seasonal workers. These companies are learning from mistakes made previous seasons and understand that delays in consumer product shipping can severely impact their bottom line and feelings towards their brand.