Toymakers racing to get holiday items on shelves

Labor shortage, supply chain issues, higher shipping costs a logistical puzzle

NEW YORK — With three months until Christmas, the Basic Fun toy company has made an unprecedented decision: leave one-third of its iconic Tonka Mighty Dump Trucks destined for U.S. store shelves in China.

Why?

Given surging prices of shipping containers and clogs in the supply network, transportation costs to get the yellow bulky toy to U.S. soil is now 40% of the retail price, which is roughly $26. That’s dramatically up from 7% a year ago.

“We’ve never left product behind in this way,” Jay Foreman, CEO of Basic Fun, said. “We really had no choice.”

Toy companies are racing to get their products to retailers as they grapple with a severe supply network crunch that could mean sparse shelves for the crucial holidays. They’re trying to find containers to ship their goods while searching for alternative ports. Some are flying in some of the toys instead of shipping by boat to ensure delivery before Dec. 25. And in cases like Basic Fun, they are leaving certain toys behind in China and waiting for costs to come down.

Like all manufacturers, toy companies have been facing supply chain woes since the pandemic started and temporarily closed factories in China in early 2020. Then, U.S. stores temporarily cut back or halted production amid lockdowns. The situation has only worsened since the spring, with companies having a hard time meeting surging demand for all sorts of goods from shoppers re-entering the world.

Manufacturers are wrestling with bottlenecks at factories and key ports like Long Beach, California — and all points in between. Furthermore, labor shortages in the U.S. have made it difficult to get stuff unloaded from ships and onto trucks.

For toy makers that heavily rely on holiday sales, there’s a lot at stake for the nearly $33 billion U.S. industry. The fourth quarter accounts for 70% of its annual sales. On average, holiday sales account for 20% of the overall retail industry. And 85% of the toys are made in China, estimates Steve Pasierb, CEO of The Toy Association.

But many toy companies said they’ll see their sales reduced because they won’t be able to fulfill orders on hot items, particularly surprise hits. They are also incurring big costs that will force some toy companies to shutter.

Toy executives say they can’t raise prices any more than 10% — even though it won’t completely cover the higher costs — because they’re worried about shopper reaction. Mattel Inc., the nation’s largest toy company, warned this summer it’s raising prices in time for the holiday season to offset higher shipping costs, though it didn’t say by how much.

Even the few toy companies that make goods in the U.S. have struggled because of labor shortages.

John Gessert is CEO and president of American Plastic Toys, based in Walled Lake, Michigan with another plant in Mississippi. He said the company is missing 35% to 40% of its frontline workers.