LKQ Corp., parent company of NTP-Stag, reported container shipments from Taiwan increased during the first quarter of 2022, even as key port cities in China shut down.
LKQ Corp. President and CEO Nick Zarcone said because of the China shutdowns, container capacity shifted to countries including Taiwan. The result, in March, was the second-best container volume month LKQ Corp. reported in two years.
“We expect some of this benefit to continue into April and likely May,” Zarcone said. “This inventory should be at our warehouses by mid- to late summer. Once the China lockdowns reopen, we will likely see a regression back to the lane bottlenecks that we have endured over the past 12 months as the pent-up demand from China comes through.”
Zarcone discussed the company’s fill rates, including RV, marine and automotive aftermarket products. The CEO said fill rates typically run well into the 90% range but are not at that level now, given supply-chain challenges.
“We are probably in the mid- to high-80s,” he said. “So, there is progress to be made. It all relates to the supply-chain challenges. Again, it has nothing to do with our suppliers being able to produce the product. It all has to do with transporting the product from Taiwan into the U.S. and Canada.”
When containers shipping in March arrive in mid- to late summer, with delays expected once the containers reach the U.S. because of port congestion and transportation issues, Zarcone said the additional inventory should increase fill rates.
“From a fulfillment perspective, we do not believe it is going to take us back to our historical levels, but it will help,” he said. “What we do feel very confident about is our fulfillment levels are the best in the industry, even with the challenges that we are facing. The reality is our smaller competitors are struggling to get product. From an overall perspective, from a competitive perspective, we think we are still leading the pack.”
