With the holidays quickly approaching and the 4th quarter rush closing in on us, is it possible closeouts will return to some level of normalcy? Well, it’s hard to say. We can hope all the vessels at sea will begin getting unloaded at the ports, however, this may create new problems. Much of these products were needed for 4th quarter sales and they will all now be too late to do anything with. Closeout brokers may be very busy as companies will need to liquidate excess inventory they no longer need. There may be a huge need to sell surplus inventory that importers are receiving too late to fill their orders. Freight from China has seen record delays due to unprecedented demand coupled with labor and equipment shortages. But it is possible a huge amount of closeouts is about to hit the U.S. market and surplus inventory piles up at the ports and businesses have no choice but to liquidate excess inventory.
Last month, the median cost of shipping a standard shipping container from China to the West Coast of the United States hit a record $20,586, almost twice what it cost in July, which was twice what it cost in January, according to the Freight index. Essential freight-handling equipment too often is not where it’s needed, and when it is, there aren’t enough truckers or warehouse workers to operate it. Closeout brokers and inventory liquidators will soon be very busy trying to buy and sell surplus merchandise finally being unloaded after months at sea. Dozens of cargo vessels stuck at anchor off the California coast illustrate the delivery disruptions that have become the signature feature of the recovery, fueling inflation, sapping growth and calling into question the global economic model that has prevailed for three decades. There has always been a need for businesses that distribute overstock home accessories and discontinued toys to sell surplus inventory, but the current situation unfolding may lead to an increased amount of closeouts that need to be liquidated.
These days during the coronavirus pandemic, with the holidays just around the corner, jam packed container ships have gotten stuck in traffic at ports, which is choking the economy and contributing to a growing number of closeouts. Businesses will soon have too much inventory they cannot sell and will have to either liquidate or close 3PL warehouses intended to distribute orders for the holidays. Delayed containers have become both a symptom of and a contributor to global supply chain problems, and is leading to a problem of businesses having too much inventory. In order to sell surplus inventory, these companies can either work to reduce inventory levels by discounting products to their regular customers, or they can contact closeout brokers that specialize in finding closeout buyers for distressed and overstock products. Cargo has generally moved more easily and cheaply now than it did before these big box metal containers came around, making them almost indispensable to the global economy.
During the pandemic shipping rates soared tenfold, and big companies turned to extreme measures to deliver their goods. Walmart, Costco and Target began chartering their own ships to ferry products from Asia and hired thousands of new warehouse employees and truck drivers. These companies may still be forced to liquidate stock as much of it may not sell as expected for the holidays. Wholesale closeout companies that buy excess inventory for cash may help the coming flood of goods that will hit the market. Smaller companies have been struggling to keep up, doing anything they could think of to get goods. As soon as Apple launched a new iPhone, for example, the available shipping containers vanished, diverted to ship Apple’s products overseas.
Unwanted inventory is a problem at the best of times, but with at least 50 massive vessels still sitting offshore near Los Angeles, when these ships are finally unloaded there is going to be too much inventory for retailers to absorb. Buyers for liquidation stock will be ready to help distribute these massive amounts of overstock and closeouts to discount stores and closeout websites.
Merchandise USA is a closeout buyer in business 37 years. We specialize in buying and selling closeouts, liquidating 3PL warehouses and handling inventory liquidations for importers.