Dive Brief:
- Yeti has been able to "secure ample capacity" for its ocean shipping needs as some in the industry struggle with accessing containers, but the brand did say it is testing the use of Port Houston to avoid congestion, CFO Paul Carbone said during the Bank of America 2021 Consumer & Retail Technology Conference on Tuesday.
- "We're seeing some elongated times coming through the port," Carbone said. Multiple ports have reported congestion issues in recent months — including Los Angeles, Long Beach and New York/New Jersey — but Carbone didn't specify where they're seeing difficulties.
- Switching to Houston will bring imports close to Yeti's Dallas-Fort Worth distribution center, but it has not yet had any imports land at the gateway, he said. Along with the port change, Yeti has also increased its use of cross-docking for its imports to help cut down on lead times and is exploring faster shipping lanes out of Southeast Asia.
Dive Insight:
Ports are clogged. Lead times are getting longer. Retailers are struggling with inventory levels as a result. And shippers are looking for alternatives. This is the supply chain in 2021.
Foot Locker recently reported a 23.6% drop in inventory as a result of delays the brand is experiencing at port facilities. And Yeti said it is having similar difficulties, reporting its inventory declined to $140.1 million in the most recent quarter, a 25% YoY drop.
"Inventory remained challenged across our channels due to COVID-related supply disruption," Yeti CEO Matt Reintjes said on the company's earnings call Thursday.
Getting inventory up will be a year-long effort for Yeti, but the brand expects levels to be up to about $200 million by the end of the year, a 40% YoY increase that would place it about in line with its 2018 levels, Carbone said during the conference.
Roger Guenther, the executive director of Port Houston, said that the gateway has seen increased interest from shippers over the last few months, noting that the port set records for import cargo volume in late 2020.
Port Houston's import levels from Asia have grown steadily in recent years, Guenther said.
"Go back more than a decade ago, we had no ships coming from Asia through the canal into Houston," Guenther said. "And now it's close to half of our import business is from Asia coming through the canal."
These services continue to grow. In December THE Alliance announced a new Transpacific route that calls on Port Houston through the Panama Canal. Other ports are growing services from Asia as well and citing congestion as one of the reasons for the new routes. The Northwest Seaport Alliance announced a new service from CMA CGM last month, a move which would alleviate "congestion in Southern California ports," according to a statement from Fred Felleman, president of the Port of Seattle Commission and co-chair of the Northwest Seaport Alliance.
Yeti isn't the only large retailer that sees promise in Houston. The port was Walmart's largest import gateway in the year up to Jan 30, 2020. Guenther said the proximity to populations centers beyond Houston like San Antonio and Dallas make it an attractive supply chain node.
"I think there's tremendous expanding opportunities to serve a much bigger market through middle America — both on the import and export side — through Houston," Guenther said.
Infrastructure has played an important role in Port Houston's growth, most notably in the form of the Panama Canal expansion project. But Port Houston also has plans to build up its own capacity in coming years with the hope that demand for its services will continue to increase.
"We have now received the authorization and the appropriation ... to widen and deepen [the Houston Ship Channel] to allow for bigger vessels, not only container vessels, but energy tankers and all that to come into Houston," Guenther said.
