Coronavirus

Companies Buy Time To Pay On Imports By Using Slower Shipping

Companies Use Slow Shipping To Delay Paying

In any other economy, companies that order products overseas want fast shipment. Not anymore, according to the Financial Times (FT).

The coronavirus pandemic has turned everything around, and merchants will do anything, even pay more, to slow shipments down.

“Anything that can delay the shipment in China, on the water, or before it hits the port of Los Angeles is helping us,” Jeff Schrimmer, president of Windy City Novelties, told FT. “Every day they hold it is another day’s grace period to weather the storm.”

Schrimmer’s Illinois party supply retailer typically imports as many as 100 sea containers four times a year. The 40-foot crates are typically filled with balloons, party decorations, glow sticks, necklaces and more.

Before the coronavirus, Schrimmer was willing to pay a premium to get the products delivered from China faster than the normal 30-day ocean trip. But last month, as governors encouraged people to stay home, revenues slipped by more than 80 percent.

In March, his company was “frantically trying to import goods” after the Chinese government shuttered factories, he said.

“Right now, I’m doing an about-face and saying: ‘Please wait. Please hold on,’” he told FT. “You know, give me a few weeks to get my feet underneath me again.”

About 90 percent of the world’s trade, like the more than 17,000 products Windy City Novelties carries, sail the ocean blue to get here. Today, floating storage devices are the answer.

Mohammed Esa, senior vice president at Agility Logistics, a Kuwait-based freight company, told FT his customers now want the containers to become floating storage devices.

“So, the slower they get to the European, the U.S. markets, the better because there’s nowhere for them to go at this point in time,” he said.

Maersk, a Denmark company that offers among the world’s largest container ships, and Mediterranean Shipping Co. (MSC), a Swiss-Italian international shipping line, are offering so-called “suspension of transit” options.

“It will also free up space at origin factories and warehouses and avoid excess inventory at site, bringing cargo closer to destination markets and alleviating the risk of congestion or closure at ports of discharge,” MSC said in a statement, according to FT.

“I’ve heard people having containers literally on the dock in China and then saying they don’t want it,” said James Newsome, CEO of the South Carolina Ports Authority, FT reported. “What nobody anticipated is how quickly the western economies have gone down…”

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About: Accelerating The Real-Time Payments Demand Curve:What Banks Need To Know About What Consumers Want And Need, PYMNTS  examines consumers’ understanding of real-time payments and the methods they use for different types of payments. The report explores consumers’ interest in real-time payments and their willingness to switch to financial institutions that offer such capabilities.

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