By Katherine Masters
NEW YORK (Reuters) - Deliveries for U.S. retailer Tractor Supply (NASDAQ:TSCO) Co have been delayed anywhere from two to 20-plus days as major container ship operators re-route vessels away from the Suez Canal, Colin Yankee, the company’s chief supply chain operator, said on Friday.
Ocean carriers are also adding diversion surcharges on cargo routed away from the Suez Canal to a safer route around South Africa’s Cape of Good Hope, according to Yankee.
Higher shipping costs, extended travel times, and additional pain points, including reduced crossings on the drought-stricken Panama Canal, are leading Tractor Supply to “see potential for volume that was moving from Asia to the U.S. East Coast to shift to the U.S. West Coast throughout the year,” he told Reuters.
However, Yankee said the rural retailer, which operates more than 2,000 stores across the U.S., is still in a “strong position” for the upcoming spring selling season. Most product destined for store shelves has already arrived in or is scheduled to land soon at U.S. ports.
Attacks on vessels in the Red Sea by Iran-backed Houthi militia have disrupted trade on one of the world's most important shipping routes, raising fears of another prolonged disruption to global trade as supply chains recover after the COVID pandemic.
Taking the safer route around the Horn of Africa adds some 10 to 15 days to transit times and roughly $1 million in fuel costs, Reuters has previously reported.
Retailers across the globe are stocking up on goods and seeking air or rail alternatives to transportation in a bid to avoid empty shelves during spring. Like many U.S. companies, though, Tractor Supply said it has been less affected by Red Sea disruptions as most of its goods come from Mexico or Asia.
In the latter case, products are shipped to the U.S. West Coast across the Pacific Ocean.