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Tags: Biden Administration | Financial Markets | shipping | containers | backlog | inflation | holiday

Supply Chain Shortages Threaten Massive Christmas Disappointments

Shelves sit empty of shoes in a Nike outlet store Tuesday, Oct. 5 in Castle Rock, Colorado
Shelves sit empty of shoes in a Nike outlet store Oct. 5, 2021, in Castle Rock, Colo. (David Zalubowski/AP)

By    |   Monday, 11 October 2021 06:17 PM

Backed-up ports and the corresponding lack of goods going through the supply chain could become a real-life "Grinch," making for a disappointing Christmas holiday for millions.

Hundreds of huge cargo ships, stacked high with thousands of containers filled with clothing, electronics, toys and staple goods, are circling U.S. ports on both coasts with no slip to dock and unload.

The massive gridlock is delaying what is usually at this point in the year a cresting apex for stocking store shelves for the holiday season, a make-or-break time of year for many retailers.

"Get out and buy toys now," Ed Desmond, executive vice president of the Toy Association, told the Daily Mail on Monday. "If you see toys you think the kids are going to want for Christmas, pick them up now and tuck them away to make sure you have them.

''We're certainly hoping that more containers come in both for the major retailers and to help some of these small stores. But one issue that we do fear is you may not see the same breadth of selection."

More than 70 ships along the West Coast have been waiting for three months in a 40-mile line to dock and unload, Forbes reported.

According to the report, each ship has about 14,000 containers each valued at $100,000 in goods, for a total of $106,400,000,000 of merchandise in shipping limbo.

Compounding the problem is a backup at the nation's major rail hubs, a lack of truck drivers to drive the containers to their respective warehouses, and an overall labor shortage that follows the entire supply chain to the stores selling the items.

In one trade report by the Institute for Supply Management, a representative in the paper goods industry said his business has seen a dramatic decrease in applicants for open positions, dropping from 100 per opening before the COVID-19 pandemic, to just 10 applicants per job opening now.

While the supply chain crisis is setting up a holiday shopping nightmare for millions looking for that special gift and the possibility of disappointment for children on Christmas not getting the toy or item they want, the impact on the economy is much deeper.

Lacking the needed raw materials, manufacturers of all types are seeing massive production delays despite high demand.

According to The New York Times' Saturday report, U.S. manufacturers are now waiting 92 days to assemble parts and raw materials into their respective products.

Empty store shelves, reminiscent of the early days of the pandemic, are again causing shortages of staples including toilet paper, making retailers such as Home Depot, Target and Walmart limit customer purchases.

Then there is the problem of costs and inflation due to the shipping crisis.

MarketWatch reported Friday that the cost of shipping items in those containers on the ships rose during the pandemic from $2,000 to $3,000 per container shipped to $20,000 per container now.

"Every container sitting there bobbing in the ocean isn't sitting in some warehouse waiting to be leased," said Richard Talmadge, an Insight Investments analyst focused on the container asset-backed bond sector for roughly 15 years. "The bigger concern I have is that everything we are talking about is a supply-chain issue."

The forecast in several of the articles is not good for the short or long term, with many experts predicting the shortage will take more than a year to sort out, and inflation could continue as demand outpaces supply.

Meanwhile, retailers including Walmar, are taking it upon themselves to lease or charter other ships to fulfill orders.

In the end, though, it might really take a miracle this Christmas to see things approaching anything close to normal.

"Right now, stores have a pretty healthy supply," said Jay Foreman of Basic Plus Toys. "We just don't know what's going to happen when we get down the road closer to Christmas."

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Backed-up ports and the corresponding lack of goods going through the supply chain could become a real-life "Grinch," making for a disappointing Christmas holiday for millions.
shipping, containers, backlog, inflation, holiday, supply chain, shortages, truckers, ports
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2021-17-11
Monday, 11 October 2021 06:17 PM
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