Mixed Messages on Ports
Bottlenecks at U.S. ports proved to be the story that wasn’t in 2006. Although retailers faced the holiday shipping season with trepidation, fearing that congested ports would hinder global commerce and negatively impact inventory management, there were no major delays or interruptions.
This was great news—particularly in light of the continued growth in inbound container volumes. According to a report released last month by the National Retail Federation (NRF) and Global Insight, the nine domestic ports surveyed handled 1.36 million Twenty-foot Equivalent Units (TEUs) of container traffic in November, a 7.1% increase over November 2005. (One TEU is equivalent to a 20-ft. ocean container of cargo.)
The NRF/Global Insight report forecasted slightly lower volumes for December, an estimated 1.32 million TEUs, which would represent a 10.1% increase over the previous year. Looking ahead, the report suggested volumes would continue to set new records throughout the coming year, although the monthly growth rates would be less in 2007 than in 2006. January was predicted to increase 4.2% over 2006 with anticipated volumes of 1.32 million TEUs. February was expected to reach 1.2 million TEUs, a significant 13.4% increase over last year. Estimates for March and April suggested volumes of 1.3 million and 1.38 million TEUs respectively, increases of 4.8% and 4.6% over the 2005 periods. In May, volumes are expected to reach 1.41 million TEUs, 7.3% over last year.
The take-away message from all these stats is that, just because ports congestion was not a story in 2006, this is not the time to ignore the sleeping giant.
Global sourcing is growing at a much faster rate than capacity—a message that I hear repeated every time a conversation turns to the topic of global supply chain concerns. In this issue’s supply chain story (page 44), you can read what Richard McDuffie, VP, transportation and logistics, for Memphis, Tenn.-based AutoZone, said on the topic.
Partnering with a third-party logistics provider or freight forwarder is how many retailers, AutoZone included, hope to manage steadily increasing container volumes. Retailers should also stay abreast of expanding capacity at the various domestic ports so they can consider routing shipments through more than one location. Several projects and new developments are under way, including:
The Port of Charleston, S.C., which has real-time, radio-frequency inventory networks and yard-management systems operational at each of its five existing container terminals, is expected to be issued permits in April for the development of a new three-berth, 280-acre container terminal.
The new Bayport container terminal at the Port of Houston received its first vessel on Dec. 6 and was scheduled to be fully operational by the middle of January.
The Port of New York/New Jersey is under way with a $1 billion redevelopment that will enhance existing terminals, deepen the harbor’s channels and improve inland access via rail and barge connections.
At the Port of Virginia, APM Terminals (based in the Netherlands) is developing a new 576-acre container terminal that is expected to open later this year.
Victoria’s Secret Names New CEO
Columbus, Ohio, Limited Brands Inc. on Monday announced that Lori Greeley will replace Grace Nichols as CEO of Victoria’s Secret Stores. Greeley is currently executive VP and general merchandising manager of intimates for Victoria’s Secret.
The retirement of Nichols, a 20-year Limited veteran, from the CEO post was announced in May 2006. She will take a new role supporting initiatives within Victoria’s Secret, including the growth of its Intimissimi brand.
Additionally, Mark Weikel, COO of Victoria’s Secret Stores, will add the title of president.
Wal-Mart to Focus on Expanding Seiyu
New York City, Wal-Mart Stores is open to acquisition opportunities in Japan, but the retailer is more focused on expanding business at its 53%-owned Seiyu chain, according to a report by Reuters. Shares of Seiyu jumped Monday after Wal-Mart vice chairman Michael Duke told the Nikkei business daily that the company might look for more acquisition opportunities in Japan.
The paper reported that Duke welcomed planned changes in corporate laws in May that will enable foreign companies to buy Japanese firms through share swaps.
Wal-Mart last year tried to invest in superstore operator Daiei Inc., aiming to boost its presence in the country, but it lost the chance to Aeon Co., Japan’s second-biggest retail group.
Wal-Mart entered the Japanese market in 2002 by taking a small stake in Seiyu. It has since invested more than $1 billion in the chain, but has yet to return the retailer to profitability.
Wal-Mart spokeswoman Amy Wyatt said Wal-Mart’s focus in Japan is on Seiyu.
“It’s a very sizable business today, so we still think that there are a lot of growth opportunities in the existing business,” she said.
In terms of acquisitions, she said: “I wouldn’t go as far as to say we’re shopping for them.”