Shipping woes bode ill for holiday shelves
Virus effects clogging supply chain
More than 1 million Rainbow High dolls are primed for the holidays — but first they need to make it out of China.
The popular toys have already overcome their share of hurdles, including shortstaffed factories and recordhigh plastic prices. But now there’s a shortage of the shipping containers that ferry them from Asian factories, warehouses and ports, to American warehouses and stores.
“I’m afraid there is simply not enough time to get products on the shelf this year,” said Isaac Larian, chief executive of MGA Entertainment, the toy giant behind Rainbow High and such popular lines as L.O.L. Surprise and Little Tikes. “The holidays are going to be very tough and, frankly, a lot of families are not going to be able to get the toys they want.”
Mounting challenges — including factory shutdowns, computer chip shortages and clogged ports — are rattling the industry as it prepares for the holiday shopping season, an eight-week window that can account for more than half of a retailer’s annual sales.
The rapid spread of the delta variant adds to the uncertainty. It already has forced a two-week shutdown of a terminal in one of China’s busiest ports, and halted operations at one-third of Vietnam’s garment and textile factories. And there are signs that consumers are pulling back. Retail sales took a hit in July, with Americans spending less on clothing, cars and furniture as the delta variant took hold.
The Biden administration has signaled that smoothing out the supply chain is a growing priority. Last week, the White House appointed
a port envoy to address congestion at U.S. ports while the recent bipartisan infrastructure deal includes $17 billion in investments for port infrastructure.
But those efforts are unlikely to offer much help before the coming busy season. Analysts say they expect widespread shortages, less selection and higher prices for a number of popular holiday gifts, including gaming consoles, TVs, toys and sneakers.
“Covid has turned supply chains on their head,” said Neel Jones Shah, global head of air freight for Flexport, a logistics technology company. “We’re seeing an astronomical rise in shipping rates, a dramatic lengthening of transit times and a logjam of cargo at every port. Shippers are scrambling to figure out how to get their goods to market in time for the Christmas selling season.”
Two of the nation’s largest retailers, Walmart and Home Depot, are chartering their own ships to retrieve their products while Amazon is beefing up its fleet of cargo planes. Urban Outfitters is switching from ocean freight to air in hopes of bypassing clogged ports in the run-up to the holidays. (Amazon founder Jeff Bezos owns The Washington Post.)
Other brands are recalibrating to avoid the frenzy. Book publishers, dogged by paper shortages and shipping delays, are pushing fall releases into early next year.
“Everybody is in the same boat, saying, ‘How do we ensure a supply of goods? What is most critical? What can we do without?’” said Robert Gerwig, senior vice president of distribution and logistics at Sweetwater, which sells musical instruments and audio technology. “They’re rapidly looking for other options to ensure goods are delivered in time.”
The time it takes to ship an item from Asia to the United States has roughly doubled — 15 days by air, 90 by sea — during the pandemic, Shah said. The backlog, coupled with labor shortages and pandemic-related shutdowns at every point in the process have led to months-long waits for electronics, furniture and other imports.
LOCAL DELIVERY SNAGS
Even once merchandise has made it to stores and warehouses, getting it to consumers’ homes will be an ongoing challenge. Delivery carriers like UPS and FedEx are scrambling to hire thousands of truck drivers and package handlers. The U.S. Postal Service has signaled plans to hire 40,000 seasonal workers and convert 33,000 non-career employees to career status to further scale up capabilities.
The holiday season produced recurring nightmares for the mail agency last year. The November election, in which nearly half of the nation’s voters cast their ballots by mail, combined with a workforce straining under covid-era package volumes gummed up the Postal Service’s entire network.
Employee availability plummeted and led to bins of packages choking walkways at sorting facilities. Scores of postal customers reported receiving holiday mail as late as April.
This year, retailers are pulling together contingency plans, finding local and regional alternatives to national carriers and, in some cases, building up their own delivery capabilities. Target is tapping its own workers to drop off packages, and Walmart is creating a new last-mile service that will help other businesses get orders to customers’ homes.
“I won’t be surprised if there are delays across the board,” said Gerwig of Sweetwater. “We’ve been spoiled as a country, expecting that packages will arrive on our doorsteps within two days. But with every carrier squeezed for capacity, that is no longer the case.”