US companies load up on costly inventories

Through most of the pandemic, Kent International, Inc couldn’t import enough Chinese-made bicycles to supply Walmart Inc (WMT.N) and its other big US retail customers.

But in recent months, the New Jersey-based wholesaler and manufacturer built a nice buffer -- about a 10-week supply at its three warehouses in California, South Carolina and New Jersey, compared to the pre-COVID normal of four to six weeks of stock. And the company is glad to have it, now that a new wave of shutdowns in China to combat rising COVID cases is roiling global supply chains. “The supply chain for bicycles has caught up,” said Arnold Kamler, the CEO. Many US companies are in the same position. Inventory levels have gone up in recent months as U.S. port congestion eased and supply chains have begun to untangle.

Wholesale inventories surged 19.9per cent in February on a year-on-year basis, according to figures released by the Commerce Department on Thursday. They were up 2.5per cent from January.