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Freight costs carry manufacturer woes

BY Michael Johnsen

NEW YORK —There may be a new kind of Grinch ready to pirate away profits from holiday sales this year, as the costs associated with shipping merchandise from the Asian market have skyrocketed heading into the 2010 holiday season.

“Costs have tripled, and quadrupled in some areas,” Jonathan Gold, VP supply chain and customs policy for the National Retail Federation, told Drug Store News. “It’s definitely more expensive than it was at this time last year.”

As of the end of August, capacity demand had stabilized somewhat, Gold reported, but if there is any indication that consumers have loosened their purse strings headed into this holiday season, demand for merchandise may very quickly outstrip available freight capacity. “It’s resolved itself for now, but there is concern [about] what can happen later on in the year,” Gold cautioned. If demand again exceeds capacity, it could prove a costly battle to get container space on a ship, and consequently some shipments could be delayed for weeks.

“Because of the economic slowdown [last year], a lot of the shipping lines took boats out of service,” said Steve Perlowski, VP member relations and industry affairs for the National Association of Chain Drug Stores. And while that has the potential to impact holiday sales, pharmacy retailers already should have their seasonal merchandise flowing throughout the supply chain. “A lot of our [retail members] typically push to receive their holiday orders in the beginning of July,” Perlowski said, and warehouse that merchandise for the few months before it’s needed on shelves. “You don’t want to be caught without product,” Perlowski said.

Net-net this year, increased shipping costs—both international freight and domestic transport, due to climbing gas prices—should only have a negligible impact on holiday merchandise margins.

While freight capacity issues have the potential to frustrate retailers this year, it may be a harbinger of better times to come. International freight, as an industry, typically lags the economic realities of today. Last year, carriers were frustrated by excess capacity—a reflection of more conservative buying habits among retailers. “By the end of September 2009, an estimated 548 container vessels with a carrying capacity of 1.3 million 20-ft. equivalent units, [or TEUs,] were idled at seaports worldwide as a result of the decline in global demand for containership services,” the U.S. Bureau of Transportation Services reported earlier this year. Global container throughput fell from 524 mil lion TEUs in 2008 to 473 million TEUs in 2009, a drop of almost 10%, according to Drewry Shipping Consultants.

But international freight carriers cautiously have resumed growth projects for the future. Drewry projected container throughput to increase globally by an average of 7.2% a year between 2009 and 2015. Ocean carriers have brought back 19% of capacity to the eastbound transpacific in the second quarter, compared with the first quarter. On the Asia-Europe trade, it is 12.4%, with a forecasted 8% returning during the third quarter.

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Jewel-Osco celebrates Hispanic Heritage Month with ‘Sabor de la Herencia Hispana’

BY Allison Cerra

ITASCA, Ill. A Midwest food and drug retailer is celebrating Hispanic Heritage Month with its third annual VIP reception to honor the culture and significant achievements of the Hispanic community.

Jewel-Osco is holding its signature event, “Sabor de la Herencia Hispana” (Taste of Hispanic Heritage), on Sept. 22, and is dedicated to recognizing the continuous efforts and outstanding contributions made by leaders from the civic, business and nonprofit sectors of the community. During the VIP reception, Jewel-Osco will honor three social service agencies for their efforts and their commitment to enriching the Hispanic communities they serve. This year, Jewel-Osco will award a total of $15,000 in grants to Association House, Namaste Charter School and The Resurrection Project.  The work of these organizations reflects Jewel-Osco’s pledge to support initiatives that mirror the company’s charitable giving strategy, which focuses on three areas: hunger relief, nutrition education and environmental stewardship, the retailer said.

The event also will highlight the unique flavors and richness of Latin cuisine, by showcasing exclusive dishes developed by culinary students from Chicago’s St. Augustine College.

“We are proud to observe Hispanic Heritage Month with an event that celebrates the culture and traditions of the Latino community,” said Jewel-Osco president, Keith Nielsen. “‘Sabor de la Herencia Hispana’ supports the culinary talent of Hispanic youth and recognizes the exceptional contributions of this community.”

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Safeway donates $25K, food and supplies to benefit San Bruno victims

BY Allison Cerra

PLEASANTON, Calif. Following a devastating gas explosion in San Bruno, Calif., the philanthropic arm of Safeway announced it will donate $25,000 to the American Red Cross to help those affected by the disaster.

Safeway also said it would provide food, supplies and grocery gift cards to families who were impacted. Roughly 80 Safeway stores in the surrounding counties are collecting donations at checkstands for the American Red Cross’ San Bruno relief effort.

Safeway operates 1,712 stores in the United States.

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