The ongoing, and well-documented, shipping issues are driving major changes in logistics strategies—all the way from the factory floor to retail stores.

In many cases that means locking in freight contracts at high prices ($8,000-$10,000 for a 40-foot container, up from the $2,000-$3,000 historical rates, but down from $20,000 or more at the peak), delivering seasonal goods earlier and, in some cases, switching to distribution centers closer to the intended market.

For example, Lifetime Brands—which sells kitchen and dinnerware under licensed brands such as KitchenAid, Farberware, and Cuisinart—is shipping 98% of its ocean freight under contract, up from 60% a year earlier, rather than securing them on a spot basis. And the company is opening a new third-party distribution center in The Netherlands to allow for shipment across Europe from Asia with 24-48 hours, CEO Robert Kay said. The move also came as Lifetime signed a new distribution agreement with Carrefour for France.

Meanwhile, Hannesbrands, whose Champion brand has become a staple for licensed collaboration, is shipping directly to some retailers, eliminating stops at distribution centers and has about 80% of its ocean freight under contract.  And Newell Brands is adding new distribution centers across the U.S. to help speed deliveries, company executives said.

On the retail end, many back-to-school retail deliveries shifted to the second quarter from the third in a move to ensure better supply for the upcoming season. As a result, Hannesbrands has 18% more inventory on retail floors and anticipates the second quarter will be its top-selling quarter in a year in which sales are expected to be flat, CEO Steve Bratspies said.

“Supply chain costs and availability continue to be challenging with higher freight in and freight out costs coupled with shipping delays and availability, which have led to delayed shipments and, in a few cases, canceled orders,” Kay said. To offset shipping issues, Lifetime has increased its inventory levels by $65 million.

Yet, whether freight needs to be under contract, may also depend on the size of the company.  For example, Hasbro and Mattel may need them to lock in costs and meet projections, said Basic Fun President Jay Foreman. But smaller companies may choose to continue with spot buys.

“If you are locked into a contract at a higher price and prices fall through the floor because of say a recession, war or general shift of consumer spending from goods back to services you could get caught on the wrong end of the price fluctuation,” Foreman said. “What we learned at key points in 2020 and 2021  are that contacts don’t always mean a lot when things go really bad. We will  look into some contract but the spot market works for us and gives us flexibility because frankly we are not sure the contracts are worth the paper they are printed on” when issues arise.

Yet despite carrying higher inventories and having it land on retail shelves as much as four weeks earlier than in years past, it remains unclear whether revenue will increase with the longer sales period.

For example, Lifetime Brands’ first quarter sales declined 6.6% despite a 5% wholesale price increase being passed on to consumers. Newell Brands, home to brands like Paper Mate, Sharpie, and Rubbermaid, expects inflation to account for 9% of its cost of goods sold this year, CEO Ravichandra Saligram said.

“People have now built up their inventories,” Saligram said. “If the pull-through is not there, then how will replenishment go? That’s a question mark and we don’t know.”

That lack of clarity is due to it not always being clear whether shipments move directly to replenish store shelves or instead are stored in distribution centers as a hedge against potential shortages this fall, said Bill Graham, president at PhatMojo.

“We expect inflationary cost pressures will remain or accelerate during the year and our ability to fully offset them won’t be achieved until 2023,” Kay said.