Imagine you are in the closeout business and you sell unwanted inventory and surplus merchandise. You have some great deals on discontinued inventory and just loaded a full container of merchandise for an overseas customer who helps you liquidate closeouts. The container is packed. It gets sealed up, the driver signs your paperwork, and you are a happy shipper. A lot of goods just left your warehouse and you have a fat invoice waiting to get paid. Except the customer never gets his container because it fell off the steamship and is sitting at the bottom of the ocean. Unlikely? Sure. Does it happen? You bet.
On average, between 2008 and 2019 about 1500 containers are lost per year. Since November almost 3,000 containers have been lost. There are many reasons this happens at an alarming rate including old cargo containers that no longer properly latch, record numbers of containers being crammed onto ships, tired crews making mistakes, and bad weather at sea. Closeout companies that liquidate closeouts and sell unwanted inventory often sell inventory that comes from China in these overloaded ships. Once these products are in the United States they often become overstock, surplus or obsolete inventory. Wholesalers don’t always know where to sell excess inventory and don’t understand how to clear old stock. There are specialists who buy surplus inventory and liquidate closeouts and distribute this inventory into a secondary discount market both in the U.S. and overseas. These are often bargain outlets and discount stores.
Most of the recent container losses have been due to weather. Heavy seas and gale force winds can toss ships around badly and containers can be lost if they aren’t securely attached. Not all containers end up in the ocean as some are just badly damaged with the contents only partially wet, smashed or compromised in some other way. This merchandise can be sold to closeout buyers who work with insurance companies on where to sell excess inventory and clear old stock or damaged goods. Partial losses like this offer some percentage of recovery if the insurance company can find the right buyers. There are reclamation firms that know how to sell unwanted inventory of this nature by opening every case, disposing of the damaged items and repacking the salvageable goods into new boxes for closeout buyers.
A simple search online will result in many closeout websites offering services on how to clear old stock, where to sell excess inventory, and how to deal with damaged merchandise and insurance claims. These closeouts are usually purchased by closeout sellers or overstock buyers who have a good understanding of how and where to re-distribute the inventory.