Supermarket firm Asda has recently chartered its own cargo ship to ensure the stability of its supply chain as it prepares for a surge in demand during the Christmas period.
The BBC reports that the supermarket giant has issued its own ship to ensure that “shelves are fully stocked with key festive products this year.”
CNBC reports that global surging shipping costs will lead to 10% price rises for consumers as rising container costs will yield cost-push inflation as price increases are passed onto the consumer.
At the same time, regulations imposed in China regarding social distances in ports such as the Ningbo port, China's second-largest marine centre, have slowed down internationally shipping routes, leading to higher container costs as in essence, time is money.
Asda has recognised this and released a statement that these supply chain problems have also hit other retailers, meaning it has become increasingly difficult to source and delivers goods from abroad. As well as Asda, UK firm John Lewis, as well as Costco and Walmart in the US, have all decided to use their own cargo ships to ensure that these stores their produce to their consumers.
This makes Asda protecting its supply chain through backwards vertical integration ever so more important as doing so will allow it to compete with other firms on a national scale as it is likely that other supermarkets, such as Tesco, will follow, to ensure that they can continue to supply Christmas confectionary.
With the ship having a capacity of 350 containers, Asda will be able to reliably supply a range of products such as festive decorations, party and celebration supplies, toys, gifts and clothing.
Asda’s boat will set off from China and will arrive in the UK in early December to ensure that consumer tastes and fashions are met.
Asda has also been keeping extra stock in depots of other Christmas confectionaries such as Mince pies, Christmas cakes, and puddings. 15,000 temporary staff are also being recruited to ensure that the potential surge in demand during the Christmas period will be met and satisfied
It comes as Asda reported that like-for-like sales fell by 0.7% in the three months to 30 September compared with the same period last year.
"This is the first time Asda has chartered its own ship and we have done so to navigate the industry-wide supply chain challenges and to make sure there is enough stock on the shelves for customers this Christmas," a spokesman told the BBC.
It is also said that due to the UK’s HGV shortage of 100,000, Asda has struggled with getting certain goods into its stores. Yet, this new measure will ensure that Asda will be able to protect its food ranges from any potential shocks.
With Asda’s sales falling by 0.7% in the past three months to the same period of last year, it is important for the firm to see a bounceback in sales against competitors so that in long run, it can continue to be dynamically efficient to potentially integrate even more of its supply chain for a much more stable customer experience.
Written by Hubert Kucharski