There is an article in the WaPo about ocean freight rates coming WAY down (from over $20k to $2.7k) but that it won’t have an immediate impact on prices.
The reasons given included “overstocked inventory, preemptive holiday buying, and rising gas and labor costs”
I get the last 2 but overstocked inventory? The only detail I saw in the article mentioned that vendors paid high prices for the inventory and that they can’t afford to sell them below cost. Huh?
That doesn’t make sense to me. Won’t other vendors buy the product at the current lower cost and undercut them? And what about the expense to hold inventory?
I can’t see that holding up for very long unless consumers keep buying stuff at higher costs. However, the trend seems to be cutting back on spending unless it is a necessity, creating even more of an overstock issue.
I would think that at some point the vendors will have to cry “uncle.”
Sometimes, even selling a certain stock when it’s below cost makes sense.
AW