Here's why the Wesfarmers (ASX:WES) share price is in focus today

Here's why market watchers might want to keep an eye on Wesfarmers today.

| More on:
Male investor holds a microscope to his eye to represent scrutiny of Wesfarmers share price

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Wesfarmers Ltd (ASX: WES) share price is on watch this morning amid reports the Australian Competition and Consumer Commission (ACCC) has launched an investigation into increasing global shipping and container costs.

The competition watchdog is reportedly concerned rising shipping costs, brought about by COVID-19-related disruptions, might dint consumers' back pockets.

Wesfarmers' subsidiary Kmart holds the crown of Australia's largest importer of shipping containers.

The Wesfarmers share price finished last week trading at $56.88, 1.5% lower than where it had ended the previous week.

Let's take a closer look at today's reporting.

Global freight hike deemed anti-competitive

The Wesfarmers share price is in focus today following reports the ACCC is worried businesses, like those owned by the conglomerate, might have to pass shipping expenses onto consumers.

In its financial year 2021 earnings, Wesfarmers noted it had seen ocean freight charges and delays increase through the year. It stated the higher fees and troubles were due to disruptions and constraints in global supply chains.

Wesfarmers spent $540 million on freight over the financial year just been. That's 24% more than in financial year 2020.

In April, Kmart's managing director Ian Bailey told the Australian Financial Review the retailer had turned to the spot container market. Bailey said the switch followed simultaneous delays in shipping and increased demand for its products. He told the publication the business wouldn't pass the added costs onto shoppers.

However, according to reporting by The Australian, the ACCC is worried about just that.

The ACCC's chair, Rod Sims, reportedly said the body is investigating anti-competitive behaviour in the freight system. Sims was quoted as saying:

There is a limited amount I can say on it, but we are looking at the freight system – particularly the role that containers play.

According to maritime research and supply chain advisory Drewry, over the year so far, the average cost of a 40-foot container has been US$6,695. That's 187% more than the five-year average.

Wesfarmers share price snapshot

The Wesfarmers share price has been performing well this year.

It is currently 12% higher than it was at the start of 2021. It has also gained 26% since this time last year.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Retail Shares

A man eases back onto his sofa, happy with the relaxed vibe from his furniture.
Retail Shares

Why I just sold half my shares in this ASX 300 stock even though I still love it!

I’m still a big fan of this business.

Read more »

Two fashionable asx investors dancing among confetti.
Retail Shares

2 'very high-quality' ASX retail shares with significant inside ownership

A fund manager has named two appealing stocks to own.

Read more »

A man sits on a bench atop a mountain with a laptop, making investments with a green ESG mind.
Earnings Results

ASX All Ords stock KMD tumbles as interim dividend cancelled

Investors are hitting the sell button on ASX All Ords stock KMD today.

Read more »

Close-up Of Empty Shopping Cart Near Person's Hand Using Calculator Over White Desk
Retail Shares

Better buy: Coles or Woolworths stock?

Which stock should go in the shopping basket?

Read more »

Person handing out $100 notes, symbolising ex-dividend date.
Retail Shares

Why did Super Retail shares drop after going ex-dividend?

This is the story behind the decline.

Read more »

Happy couple doing online shopping.
Opinions

Is it too late to buy after the Kogan share price rocketed 90% in a year?

Is this online retailer still an investment opportunity?

Read more »

Two people comparing and analysing material.
Retail Shares

Better buy in March 2024: Wesfarmers stock vs JB Hi-Fi stock

Which of these two retail heavyweights would be a better buy?

Read more »

A man eases back onto his sofa, happy with the relaxed vibe from his furniture.
Share Gainers

If you'd put $30,000 in this ASX retail stock 11 months ago, you'd have $116,000 now

When battered stocks make a comeback, it happens very quickly. Here's a prime example.

Read more »