Burlington Doubles Down on Ocean Contracts to Manage Soaring Freight Costs
As freight costs continue to pressure retailer margins across the board, Burlington Stores is taking a proactive, calculated approach to insulate its supply chain from volatility. The off-price retailer is betting on long-term ocean contracts and smarter load efficiency strategies to keep costs in check — and it could set a new standard for how value-focused retailers approach logistics in an uncertain global environment.
According to Chief Supply Chain Officer Greg Shultz, Burlington is not only leaning into ocean contracts to stabilize freight expenditures, but also increasing the volume of product packed and loaded for both inbound and outbound shipments. These dual strategies reflect a broader commitment to operational discipline at a time when the logistics landscape remains anything but predictable.
Why Freight Costs Are Still a Major Problem for Retailers
Even as the explosive rate spikes of the COVID-19 pandemic era have partially subsided, freight costs remain elevated compared to pre-pandemic benchmarks. Multiple factors continue to drive this pressure, including geopolitical disruptions, fluctuating fuel prices, port congestion, and ongoing instability in key global shipping lanes.
For off-price retailers like Burlington — whose entire business model depends on sourcing merchandise at a discount and passing savings to consumers — freight cost management is not just an operational concern. It is a core competitive issue. When freight rates climb, margins shrink. When margins shrink, the off-price value proposition becomes harder to deliver.
This is why Burlington's move to lock in ocean contracts is being closely watched across the retail and logistics industries. By securing rates in advance rather than relying on the spot market, the company is effectively hedging against future volatility and providing its supply chain team with greater cost predictability.
The Strategic Logic Behind Long-Term Ocean Contracts
Ocean freight contracts come in various forms, but the fundamental idea is straightforward: a shipper agrees to move a certain volume of cargo over a set period at a negotiated rate. In exchange for this volume commitment, carriers offer more stable pricing compared to the often-erratic spot market.
For Burlington, this approach provides several key advantages:
- Cost predictability: Locking in rates allows finance and supply chain teams to model costs with far greater accuracy, reducing the risk of budget overruns caused by sudden rate spikes.
- Carrier relationships: Long-term contracts help build stronger partnerships with ocean carriers, which can translate into better service reliability, priority access to vessel space, and more favorable terms during tight capacity periods.
- Competitive insulation: While competitors scrambling for spot market capacity pay premium rates during demand surges, Burlington can maintain more stable unit economics — a significant edge in the off-price retail world.
- Supply chain resilience: Having dedicated capacity agreements reduces the risk of cargo being rolled or delayed, keeping inventory flowing predictably into stores.
This strategy is particularly well-suited to a retailer like Burlington, which imports large volumes of merchandise from overseas manufacturers. The ability to plan shipping costs in advance aligns directly with how off-price retailers buy inventory — often making purchasing decisions months ahead of selling seasons.
Load Efficiency: Getting More Out of Every Shipment
Alongside the ocean contract strategy, Burlington is increasing the amount of product packed and loaded per inbound and outbound shipment. This focus on load efficiency is a deceptively powerful cost-reduction lever that many retailers underutilize.
When you can fit more units into a single container or truck, you lower the per-unit transportation cost without needing to negotiate a single rate change. Over thousands of shipments annually, even marginal improvements in load density can generate millions of dollars in savings.
Greg Shultz's emphasis on both inbound and outbound load optimization suggests Burlington is looking at its entire supply chain network holistically — not just the ocean leg, but also the domestic distribution of goods from warehouses to stores. This end-to-end thinking is a hallmark of mature, sophisticated supply chain management.
Achieving better load efficiency typically requires investment in data analytics, packaging redesign, warehouse process improvements, and sometimes renegotiating vendor packaging standards. The fact that Burlington is actively pursuing this at scale signals that the company views supply chain optimization as a long-term structural priority, not just a short-term cost-cutting measure.
What This Means for the Broader Retail Logistics Landscape
Burlington's dual-track approach — ocean contracts plus load efficiency — reflects a broader shift in how sophisticated retailers are rethinking supply chain strategy in the post-pandemic era. The days of treating logistics as a back-office function are over. For retailers competing on price, supply chain excellence is now a front-line differentiator.
Other off-price and value-oriented retailers are likely watching Burlington's moves carefully. If the strategy delivers the expected cost savings and operational stability, it could accelerate a wider industry shift toward longer-term carrier commitments and renewed investment in load optimization technologies.
For consumers, the downstream benefit could be more consistent product availability and continued competitive pricing — exactly what Burlington's core shopper base has come to expect.
Looking Ahead: Supply Chain as a Competitive Moat
Burlington's bet on ocean contracts and improved load efficiency is more than a response to current freight market conditions. It is a signal that the company is investing in building supply chain capabilities that can serve as a durable competitive moat. In a retail environment where every basis point of margin matters, the brands that win will be those that master the complex, unglamorous work of moving goods efficiently from origin to shelf.
With leadership actively engaged in supply chain strategy at the highest levels, Burlington appears well-positioned to navigate ongoing freight volatility — and potentially emerge with a structural cost advantage over less-prepared competitors.