Global supply chain problems have left everything from crates filled with rotten red cabbage to abandoned beer crates and dog blankets.
Stranded, unwanted, or delayed cargo has sparked a boom in the cargo salvage business – and a group of companies that have rarely been at the heart of how world trade continues to thrive.
“We are extremely busy with people breaking and unpacking the goods. Jake Slinn, director of salvage company and UK stock buyer JS Global, said:
The exact size of the salvage and excess inventory market is yet to be determined, but these groups are handling thousands of goods that need to be destroyed or resold as demand for their services grows.
They are also becoming increasingly important to shipping corporations, logistics companies and insurers as cargo becomes stranded due to supply bottlenecks and extended transit times.
San Francisco-based forwarder Flexport says it now takes more than 100 days from receiving goods from Asian exporters and delivering them at European or US ports, up from less than 60 days in 2019.
Goods are often delayed further when they reach the mainland because of truck driver shortages and cramped warehouses with limited storage space.
However, despite his growing business opportunity, Slinn said buying throwaway containers can be a gamble.
“We’re playing a lot of containers because we’re not sure what the cargo is inside. You never know what you’re going to get,” he said.
He handled thousands of fake masks, unqualified boxes of red cabbage and a batch of tires sent to Dublin by a rogue exporter.
Other groups that have benefited from the resale boom are auction platforms. They are used to resell goods sold at distribution centers or factory floors, as well as at ports.
Charlie Wilson, head of online marketplace Salvex, which is owned by Canadian group Ritchie Bros., said out-of-season merchandise and excess industrial parts are often put up for sale. “We went through a boom period,” he added. “This is like a global hurricane. We are hearing similar stories in Kenya, LA and across Europe.”
He estimates the supply of leveraged goods for his platform has grown by about 15% year over year.
Auction Technology Group, a London-based listed market operator, said the wide range of industrial and commercial goods sold on its platform grew to £4.6 billion in the 2021 financial year, higher 38% over the previous year.
CEO Richard Lewis added that their auction platforms have also seen strong growth in listings of items returned by online shoppers, who have bought more during the pandemic. .
However, companies that liquidate inventories — many of which also buy leveraged stock — have had a tougher time.
Michael Harrow, of SG Trading, says this type of business usually does well during recessions.
“We like to think of ourselves in the crude sense of being the one doing the job. “We are called upon when there are problems with the business, the supply chain and the regulator,” he said.
But developing and pricing merchandise is more difficult during a pandemic as sales routes such as street markets, pickup trucks and independent wholesale stores have disappeared as retail moves online. , he added.
American technology and logistics giant Amazon is increasingly shaping the market for surplus goods and abandoned inventory.
JS Global’s Slinn has seen pallets of goods he has handled being resold on Amazon, while other traders report sourcing from third-party sellers on the platform who offer that the sale of Amazon-branded goods caused a drop in sales of their own products.
Insurers have also been helped by a related drop in claims.
Mike Yarwood, managing director of loss prevention at TT Club, the transport and logistics insurer, said claims had “reduced” due to a higher tolerance for error by importers. , although the group warned that risks from abandoned goods were escalating.
However, despite the business boom of many groups, some companies dealing with retailers are still struggling because they are less willing to drop goods due to difficulty in keeping new stock.
Some retailers also tend to discount and sell themselves rather than turning to inventory liquidators, a supplier to major UK budget retailers such as Poundland, B&M and Lidl said.
“I’ve been buying stocks for 40 years and it was the hardest year I’ve ever known,” said Robert Myers, chief executive officer of Heathside Trading Ltd, which buys toys and leftovers. “The value of stocks on everyone’s balance sheet is so much higher because [elevated] transport costs. ”
Increasingly, multinational companies also tend to require destruction of goods rather than resale, while health and safety rules have made it more difficult to sell damaged goods.
Big international companies are paranoid about their branded products hitting the market either defective or cheaper, says Steve Parry, director of CWH Johnsons International, a commodity survey .
“In the old days, you could sell anything,” he added.
However, supply chain disruptions are expected to continue well into 2022, meaning demand for cargo salvagers and stock resellers is unlikely to ease, especially if the crisis continues. The Covid crisis worsened, disrupting global shipping and transportation further.
“You will see an upward trend in insurance claims [as goods go missing or get stuck in transit] next year, then it will fall out when they sort it out,” said Tom Enders, owner of Michigan-based The Salvage Groups.
