The supply chain crisis is testing retailers across the country ahead of the holiday season, and one executive detailed the question on everyone’s minds.
As “every retailer is feeling the global supply chain disruption,” CarParts.com Chief Operating Officer David Meniane told Yahoo Finance Live (video above), the question becomes: “What do you do about it? Do you see it as an opportunity to be more aggressive and double down on investments? Or do you pull back?”
Supply chains have been bogged down for weeks with bottlenecks in shipping and labor shortages in trucking, causing massive delays in moving goods across borders.
According to California’s Marine Exchange, there are currently 61 container ships anchored and 25 at berth in the areas between Los Angeles and Long Beach, as of Oct. 11. When this happens, container fees can spike.
“Let’s look at the math: It’s 14 days to get a container from APAC to the U.S. and 40 days for it to get back,” Coresight Research Founder and CEO Deborah Weinswig said in a previous interview on Yahoo Finance. “And we have a complete container misalignment right now. So that’s 80 days, we’re talking, in our opinion — we’re probably looking at Q1 2023 before all of those containers get back and realign.”
‘We’ve been very aggressive’
For CarParts.com, the company has tried to get ahead of the crisis by going at maximum speed with its investments over the last year.
“We’ve been very aggressive for the last 18 months in terms of bringing in inventory,” Meniane said. “We’re deploying capital. We’re buying inventory. We’re opening distribution centers. We’re trying to get closer to our customers. … I think we’ve … done a great job at kind of working around the constraints.”
But the labor shortage is also playing a major role in compounding supply chain bottlenecks.
While the September jobs report noted “notable job gains” for the month, with employment in transportation and warehousing increasing by 47,000 and employment in retail trade rising by 56,000, companies are short staffed, with warehouses preparing for more tightness in the market.
All these constraints, experts have repeatedly stressed over the last few weeks, also leads to elevated inflation, and Meniane said his industry was no exception.
“In terms of auto parts in general, there’s definitely some inflationary pressure, both on inbound freight, outbound freight, cost of goods, and also labor,” he said.
But “if you look at auto parts in general, as far as protecting from inflation, it’s usually a good bet,” he countered, adding that “we’re slightly raising prices, and we’ve been able to protect margin in general.”
Aarthi is a reporter for Yahoo Finance. She can be reached at email@example.com. Follow her on Twitter @aarthiswami.