Burlington Bets on Ocean Contracts to Combat Elevated Freight Costs
As freight rates continue to strain retail margins across the industry, Burlington Stores is taking a proactive stance. The off-price retailer is placing its bets on long-term ocean freight contracts and smarter cargo loading practices to get ahead of persistently high shipping costs. According to Greg Shultz, Burlington's Chief Supply Chain Officer, the company is not only locking in favorable rate agreements but is also increasing the amount of product packed and loaded for both inbound and outbound shipments — a move designed to extract more value from every container that moves through its supply chain.
In an industry where margins are razor-thin and freight volatility can make or break a quarter, Burlington's strategy offers a window into how major retailers are adapting to a new era of supply chain complexity.
Why Freight Costs Remain Elevated
To understand Burlington's strategy, it helps to understand the broader freight environment driving it. After the dramatic swings of the pandemic era — when shipping rates hit historic highs, then cratered — the freight market has struggled to find a stable floor. Ongoing geopolitical disruptions, including tensions in the Red Sea that have forced major ocean carriers to reroute vessels around the Cape of Good Hope, have added thousands of miles and days to transit times. That rerouting alone has effectively reduced global container capacity by limiting how quickly ships can cycle through routes.
At the same time, port congestion, labor negotiations, and rising fuel costs have kept operational expenses high for ocean carriers. Those costs inevitably trickle down to shippers like Burlington, who must either absorb the expense, pass it along to consumers, or find creative ways to offset it.
For a value retailer whose entire brand promise is built around offering discounted merchandise, passing higher costs on to shoppers is not a viable long-term solution. That makes supply chain efficiency not just a back-office concern but a front-line competitive advantage.
The Case for Long-Term Ocean Contracts
One of Burlington's primary responses to freight market volatility is securing long-term ocean contracts. Unlike spot market purchases — where shippers pay whatever the current rate happens to be at the time of booking — contracted rates offer price certainty over a defined period, typically one year or longer. When markets are volatile or trending upward, these contracts can represent significant savings compared to spot rates.
For a retailer of Burlington's scale, locking in contracted rates also means guaranteed capacity. During tight market periods, carriers prioritize their contracted customers, giving Burlington more reliable access to vessel space even when demand surges. This kind of supply chain resilience is especially critical for a retailer that sources a substantial portion of its inventory from overseas manufacturers, particularly in Asia.
The tradeoff, of course, is that long-term contracts can be a liability if spot rates fall sharply below contracted levels. However, given the structural factors currently keeping freight costs elevated — including the Red Sea disruptions showing no immediate signs of resolution — Burlington appears to be making a calculated bet that rate stability is worth the risk of potentially paying above market in a downturn.
Maximizing Cargo Density: Doing More With Each Shipment
Beyond contracts, Burlington is tackling freight costs from another angle: maximizing the productivity of each shipment. Chief Supply Chain Officer Greg Shultz highlighted the company's efforts to increase the amount of product packed and loaded for both inbound and outbound shipments. This approach, often referred to as improving cargo density or cube utilization, is about making sure every inch of available container space is used as efficiently as possible.
When a container is not fully optimized, a retailer is effectively paying for empty air. By improving how products are packaged, stacked, and loaded, Burlington can ship more units per container — which directly lowers the per-unit cost of freight. For a high-volume retailer moving thousands of SKUs across multiple distribution channels, even marginal improvements in cargo density can translate into millions of dollars in annual savings.
This kind of operational fine-tuning requires close collaboration between merchandising, logistics, and vendor partners. Suppliers may need to adjust packaging dimensions, modify pallet configurations, or change how goods are bundled. It is a behind-the-scenes discipline that rarely makes headlines but has an outsized impact on the bottom line.
What This Means for Burlington's Supply Chain Strategy
Burlington's dual approach — securing ocean contracts while improving load efficiency — reflects a broader philosophy of finding savings through operational discipline rather than simply waiting for the market to improve. It signals a mature, proactive supply chain organization that is unwilling to leave cost reduction on the table.
This strategy also aligns with Burlington's long-term financial goals. The company has been on a multi-year journey to improve its supply chain infrastructure, including investments in new distribution centers and technology. Better freight management is a natural complement to these investments, ensuring that goods move through the network as quickly and cost-effectively as possible.
Lessons for Other Retailers Navigating High Freight Costs
Burlington's playbook holds lessons for any retailer grappling with elevated shipping expenses. A few key takeaways stand out.
- Contract when conditions favor it: Long-term ocean contracts provide cost certainty and capacity assurance in volatile markets. Retailers should evaluate their freight exposure regularly and consider contracting a meaningful portion of their volume.
- Optimize every shipment: Cargo density improvements are low-hanging fruit for many companies. A systematic audit of packaging and loading practices can uncover significant savings with relatively modest investment.
- Align supply chain and merchandising teams: Freight efficiency cannot be achieved by logistics teams alone. Cross-functional collaboration between buying, planning, and operations is essential to making structural improvements.
- Think long-term: Short-term spot market gains can be tempting, but a resilient supply chain strategy requires building systems and relationships that perform well across market cycles.
The Bottom Line
Burlington's decision to lean into ocean freight contracts and cargo density improvements is a clear-eyed response to a freight environment that shows little sign of returning to the ultra-low rates of the post-pandemic correction. By locking in rate certainty and squeezing more productivity out of each shipment, the retailer is doing what successful off-price merchants have always done best: finding value where others overlook it. In today's supply chain landscape, that discipline is not just good logistics — it is a genuine competitive edge.