Online pet supply retailer Chewy has begun operating a portion of its linehaul needs through its own middle mile fleet and network in a bid for more reliable and less expensive transportation, CEO Sumit Singh said on the company’s most recent earnings call.
The initiative, called Chewy Freight Services, launched in the Phoenix market in Q1 and comes as the company faces higher out-of-stock levels and expects freight rates to remain elevated in 2022. Chewy already saw a 22% rise in the cost of goods sold during fiscal year 2021, in part due to outbound freight and shipping costs, according to its annual financial report.
Chewy Freight Services is just one way it’s tackling supply chain challenges.
Chewy started a program in January to place inventory closer to customers, and is in the process of launching a “transload overseas shipping initiative” to position international inventory closer to fulfillment centers, Singh said. Additionally, Chewy formed an internal supply chain research and planning team that will enable “geo-located inventory discovery for customers,” along with other inventory availability improvements.
