Dive Brief:
- TJX reaped the benefits from lower freight costs in Q3, with its gross margin up 100 basis points year over year, Senior EVP and CFO John Klinger said during a Nov. 19 earnings call.
- The gains were attributed to a combination of favorable ocean rates, alongside other efficiencies around moving its merchandise, Klinger told analysts.
- It is unclear whether the cargo tailwind will continue in Q4, Klinger said, clarifying that it is up to ocean freight providers and whether they “start taking ships offline and try to decrease the surplus or availability.”
Dive Insight:
Tariff uncertainty, tensions in the Red Sea and the implementation of U.S. fees on China-linked ships — which have since been suspended — are among the many issues shaking up ocean shipping and influencing rates.
Ocean rates fell to their lowest levels since late 2023 around mid-October as cargo frontloading eased and available capacity grew.
Container carriers continue to battle downward pressure since October due to a seasonal lull in demand and growing capacity on East-West trade lanes, according to a Nov. 18 market update from Freightos.
“Nonetheless, driven by significant steps to reduce capacity, they succeeded in pushing through mid-October GRIs that rescued rates from two-year lows, and pushed prices up again with November 1st rate increases,” per the update.
Transpacific rates have dropped since passing November’s midway point. Daily rates slipped more than 20% as of the week of Nov. 18, erasing any November gains tied to carrier rate increases.
Freightos reported that Transpacific rates to the East Coast have also fallen by more than 20% during the week of Nov. 18, reaching pre-October general rate increase levels.
The Port of Los Angeles expects volumes to soften next month, compared to the previous year where shippers pushed frontloading strategies to buffer the impact of looming tariffs, Executive Director Gene Seroka said during a Nov. 18 media briefing. Other ports may also experience a a slowdown for the remainder of the year, according to data from the National Retail Federation and Hackett Associates.
