With the economy still wrought with troubles, high-priced freight contracts written when carrier capacity was tight and businesses were in a mad rush to restock inventories are falling out of favor, The Wall Street Journal reports.
Some companies are now attempting to renegotiate the shipping agreements they put together at the beginning of the pandemic.
Others have dipped into the spot market to try and find lower rates.
All of this could be a plus for manufacturers and retailers after two years of wildly high prices, and it also suggests that the way the freight sector has been contributing to inflation might be diminishing somewhat.
One official working for a big U.S. importer said it cut down the ocean contract rates it signed just months ago by 15% to 20%, with more reductions coming later in the year.
Shippers have said they’re still paying exponential amounts more than they used to before the COVID-19 pandemic began. The report notes that one shipper at a large importer has said they’re facing “hundreds of thousands” of dollars in penalties over missing contracted volumes.
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Consumer goods imports were down by $1.5 billion by value in May, according to the Commerce Department, with Americans cutting down on things like furniture and TVs. But container imports into the U.S. by volume were still good, and there was increasing congestion at East Coast ports.
According to WSJ, though, there are some mixed signals — a report Friday says import volumes will likely decline compared with last year’s period between August and November.
PYMNTS wrote that some big retailers are seeing excess inventory, which could help companies designed to do away with the oversupply. Companies like Liquidity Services and Xcess Limited have seen a lot of overstock on things like kitchen appliances, TVs, outdoor furniture and more.
Read more: Liquidators Step Up as Retailers Confront Oversupply of Goods
In a lot of cases, the companies are picking up pallets at ports or from warehouses and the goods never even make it to the floors — they are instead sold to smaller companies or individuals who resell things online.
