(Bloomberg) — Five Below Inc. has asked vendors to turn away products waiting for shipment in China before they set off for the US, according to a memo reviewed by Bloomberg.
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Shipping giant A.P. Moller-Maersk A/S sent a letter to suppliers on behalf of the discount retail chain saying that the company has elected to suspend its cargo shipments, following the US and China tariff impact. It was unclear from the memo if it went out to all Five Below vendors, or a subset.
The letter says that no containers are to be delivered to the yard starting April 10, and all containers that are loaded must be unpacked and returned to the carrier.
A Maersk spokesperson said the company does not provide any specific individual customer information publicly. “We are in close contact with our customers while they navigate a volatile and uncertain business landscape,” the spokesperson added.
A representative for Five Below didn’t immediately respond to a request for comment.
Retailers and other businesses are on edge as the US-China trade war escalates and shipments between both countries drop off.
Amazon Inc. is among a number of retailers — big and small — that have begun canceling orders from China and other parts of Asia. Global container bookings made between April 1 and 8 dropped 49% from the seven-day period immediately before, according to estimates from Vizion Inc., a tech company that gathers supply chain data.
Five Below’s decision to cancel shipments reflects an escalation of the chaos unfolded by the tit-for-tat tariffs between the US and China. On Thursday, the White House clarified US tariffs on China rose to 145%.
The memo didn’t clarify who is on the hook to pay for those shipments: “All costs involved with these activities should be consulted with Five Below Merchandise partners,” it said.
China is Five Below’s largest source for merchandise that is imported, the company disclosed in a securities filing last month. The specialty retailer also noted that the “significant majority” of its merchandise comes from outside of the United States.
–With assistance from Lily Meier and Shelly Banjo.
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