Shipping delays at the Port of New York are now causing concern among shippers and retailers before the start of the pre-holiday peak shipping season. The National Retail Foundation (NRF) recently sent a letter to the Port Authority of New York and New Jersey and the New York Shipping Association expressing concern about the two month hold up.
The initial cause of the congestion was the integration of new software by Maher Terminals, which handles a third of the port’s volume. Delays spread throughout the port as ships were diverted to other terminals, including Bayonne, NJ which itself is undergoing major construction. The Port of New York is the largest container shipping port on the U.S. East Coast.
Maher responded that service had now returned to acceptable levels during the past several weeks, albeit at reduced volume.” Maher had scaled back some of its software installation to effect delays. Ironically, the delay was caused by software intended to improve port efficiency. Instead, the software sometimes closed down terminals, sometimes for hours at a time.
Some retailers may turn risk averse at the thought of empty shelves during the Holidays while the nation is undergoing a slow economic recovery.The congestion at the Port of New York has led some retailers to consider using other ports, such as Baltimore and Norfolk, VA.
Low-price retailers like T.J. Maxx and Off Fifth, owned by Saks, Inc., have a difficult time with e-commerce. Since they’re dealing with odd-lots and sometimes limited quantities the online retail process can be complex and expensive. E-commerce is not for the weak of heart and not the weak of wallet if you’re doing it on your own.
T.J. Maxx is one of a number of low-price retailers are now weighing the costs against potential profits and deciding it’s time to make the investment. Analysts at Avondale Partners believe that T.J. Maxx can quickly reach annual sales of $1 billion. That’s a lot of odd lots. The computer upgrades are not cheap. Last year, T.J. Maxx spent $200 million to acquire online Sierra Trading for its tech and experience in e-commerce. Saks is spending $95 million over three years to upgrade Off Fifth’s retail capabilities.
Hudson’s Bay Co. saw the potential e-commerce value in Off Fifth last year when it bought the larger company for $2.9. That’s a serious investment. T.J. Maxx hopes that the market is more mature and that the technology is better this time around. It gave up its last attempt in e-commerce in 2005 having lost $15 million in the process.
If you don’t have the odd $95 million in your coffers to build your own system, Capacity LLC is there to help. We can apply our capabilities not only to resolve your challenges but also to take advantage of the opportunities that can get you to the next level. We can walk you though it and help you to fly over the potentially painful patches.