“Attention, Shippers …”
Let’s see if we got this straight. There’s little doubt that Walmart is the biggest success story in the history of merchandising. Its growth is being measured in leaps and bounds – and in fact, it was just announced that the company intended to open another twelve dozen or so new stores in New York.
So how are they making such strides? How can they afford to open new store after new store when so many other retailers are closing their doors? What’s the big secret?
It’s no secret at all. For years and years merchants got a leg up on their competition by lowering prices. This simple measure attracted the buyer, the goods were sold, and the merchant salted away the profit. Or if there were further worlds to be conquered, the merchant used this profit to open another outlet somewhere. And this expanded operation generated even more profits to salt away or invest. It was always so. Those who did not follow suit by lowering prices in the face of this competition fell by the wayside. Sam Walton knows this. Everyone does.
Well, maybe not everyone. Exim India reports that, “International accountant and shipping advisor, Moore Stephens, has warned that some shipping companies are not adequately prepared to conduct successful negotiations with their banks, which are likely to occur with increasing frequency.
“Mr. Paul Edwards, a Moore Stephens Corporate Finance Director, says, ‘Shipping is experiencing tough times. An increasing number of companies are unable to repay or, in some cases, even service their debts. That could mean an uncomfortable meeting with their banks. But too many companies are not properly prepared for such an encounter.'” –
So just how are carriers preparing “for such an encounter”?
– From the Journal of Commerce (April 25, 2012) – “Maersk to Raise Asia-Latin America Rates – Maersk Line will impose a peak-season surcharge on trades from Far East Asia to Latin America, starting May 20 … ” –
– From the Journal of Commerce (April 26, 2012) – “Hapag-Lloyd will increase its freight rates on major trade lanes as part of a new rate restoration program. The German ocean carrier said rates … will go up $ 200 per 20-foot equivalent unit, effective May 15.” –
Raising prices instead of lowering them? Why not? Why heed Moore Stephens warning when a contradictory Drewry advisory states that, “Exporters and importers should keep close tabs on the financial health of their ocean carriers. From a cargo owner’s perspective, obtaining low prices from an ailing carrier is an unsustainable position that will require a strategic review at some stage. Carriers in this state of financial distress will either be forced to drastically alter their operations or disappear altogether.”-
Low prices … an unsustainable position? Try that one out on Walmart.