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Professor Margaret Kidd, who teaches supply chain courses at the University of Houston, explains what factors are needed to alleviate the supply chain crisis.
With soaring prices for shipping containers and clogs in the supply network, transportation costs for getting children’s toys to US soil hit new highs with three months to Christmas.
“The pandemic has caused disruptions in the global supply chain that have slowed imports into the United States and affected retailers at all levels,” Jonathan Gold, vice president of supply chain, told Fox Business and the customs policy of the National Retail Federation. “The issues include congestion at US ports, the availability of containers overseas, the capacity of ocean carriers, lack of warehousing, lack of truck and train capacity, and a shortage of manpower. Retailers are doing everything in their power to make sure shelves are fully stocked for the holidays, from bringing merchandise earlier to chartering their own ships. Consumers should be able to find what they need for the holidays, but it’s always safer to shop early than wait until the last minute.
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Toy companies are rushing to get their products to retailers as they grapple with a severe supply network crisis that could mean sparse shelves for the crucial holidays. They are trying to find containers to ship their goods while looking for alternative ports. Some are stealing in some of the toys instead of shipping them by boat to ensure delivery by December 25th.
Like all manufacturers, toy companies have faced supply chain issues since the pandemic temporarily closed factories in China in early 2020. Then, US stores temporarily cut or halt production amid the booms. closures. The situation has only worsened since the spring, with companies struggling to meet the growing demand for all kinds of products from reintroduced buyers around the world.
Manufacturers struggle with bottlenecks at factories and major ports – and at all points in between. In addition, labor shortages in the United States made it difficult to unload goods from ships and trucks.
But for toy makers who rely heavily on holiday sales, there’s a lot at stake for the nearly $ 33 billion US industry. The fourth quarter represents 70% of its annual turnover. On average, vacation sales represent 20% of the entire retail industry. Eighty-five percent of toys are made in China, said Steve Pasierb, CEO of The Toy Association.
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The growls are so bad that some retailers are telling companies they don’t want products if they ship after mid-October. That’s because products that typically took four to six weeks from the time they left a factory in China and landed in a U.S. distribution center now take 12 to 16 weeks, said Marc Rosenberg, a toy consultant.
The hardships come as the U.S. toy industry saw an almost 17% increase in sales last year and a 40% increase in the first half of this year, with parents looking to entertain their children at home. , according to NPD Group, a market research company. .
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But while analysts expect strong growth in 2021, many toy companies have said they will see sales decline as they will not be able to meet orders for hot items, especially surprise hits. . They also incur significant costs that will force some toy companies to close their doors.
Toy officials said they couldn’t increase prices by more than 10%, although that wouldn’t fully cover the higher costs as they worried about the reaction of buyers.
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Container costs on ships have more than six-fold from last year, with some brand executives saying they jumped from around $ 3,000 a year ago to $ 20,000.
Bottlenecks are expected to have lingering consequences. Toymakers are facing pressure from retailers to ship the first flow of holiday 2022 products in early March instead of late April and the second cycle in June instead of late July, said Andrew Yanofsky, head of marketing and sales. operations at WowWee.
This will force companies to make decisions on how much to manufacture and revamp without having a full picture of sales data, he said.
Yanofsky said he initially placed a big bet on Got2Glow Fairy Finder, a jar light show that allows kids to find virtual fairies because he knew he wouldn’t be able to piece production together. held grunts.
“We took a risk on the excess material beyond what we thought we could sell,” he said.
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Even the few toy companies that make goods in the United States have experienced labor shortages.
John Gessert is CEO and President of American Plastic Toys, based in Walled Lake, Michigan, with another factory in Mississippi. He said the company is missing 35% to 40% of its frontline workers. Now it’s focusing more on play kitchens that require six workers and more towards less labor-intensive toys like basketball sets, which only require three workers to assemble.
“I have never had such a complicated puzzle to solve,” he said.
The Associated Press contributed to this report.
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