Because JIT is not good enough.

OK, raise your hand if you heard “ocean freight” connected with “cost reduction” more than once so far this earnings season. C’mon, I know we hate shippers, but this is different.

“Ocean freight” = “lower turns”

“Lower turns” = “higher inventory” (depending upon shipping terms – but someone is still holding the stuff)

“Higher inventory” = “greater Gross Margin risk”

Ohhh…but shipping costs are down to offset GM risk. Got it. So how does JIT work again? Deflation? China supply?

Wait, I thought Chinese wages were going up with the RMB.

I am so confused. FOB, CFR, DDU…sounds like maybe that whole JIT thing is a passing great idea and that shipping is the next storehouse of inventory. The question is “who is going to hold it?”

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