on September 02, 2021 Retail Insights

Logistics Chaos Across the Globe

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Retailers, brands and consumers forced to re-think their plans for 2021 holiday

THE SITUATION

Previous international ship times of 45 days have grown to 60+ day wait times and, in some cases, over 80 days. And even when goods are received at one of the 100+ ports along the American shoreline, wait times from freight forwarders are greater than average due to the backlog. In essence, our ports have become a waiting room for anyone awaiting arrival of an imported product. “Take a number, get in line,” is status quo.

According to Reuters, “The shipping logjams are due to more than just the backlog in Yantian, which is considered Amazon's No. 1 Chinese seaport, - accounting for 32.4% of shipments handled by the e-commerce company in the three months to May 31, according to S&P Global Market Intelligence's trade data firm Panjiva. While Yantian port reopened on June 24, a shortage of containers was still constraining full activity, globally cargo ships are overbooked, containers are stranded in the wrong places, and ports are congested. Products are piling up on factory floors, in warehouse parking lots, on seaport docks and at rail yards - threatening more backups than last year's holiday "shipageddon," when many items arrived after Christmas.”

For U.S. importers of international products, goods and merchandise, staying on top of supply in order to meet consumer demand, is more critical than ever before. No doubt the recent surge in shipping containers arriving at U.S. ports has caused a backup of goods awaiting pickup and delivery. Businesses are feeling it, and consumers are finding that access to basic household items, school supplies and more is increasingly challenging. Add to that, spiking prices at the retail counter are hitting home, and pocketbooks. According to Global Trade Magazine, “container availability across China is at a record low, while US ports are overwhelmed by a surge of shipping containers from Asia, full of products retailers are eager to get on shelves for the holidays.“

UNIVERSAL IMPACT

What does all of this “chaos” mean for American retailers – large and small, brands and consumers?

• Companies with advanced buying power are responding by buying now, and have been for several weeks. What they would otherwise buy year-end or come first quarter 2022 is already on-order, but not without a cost. Buying now means paying thousands of dollars in premiums for guaranteed arrival times.

• For small-medium sized companies unwilling or unable to pre-order AND endure the exorbitant surcharges issued by container companies and carriers, the situation could be devastating.

• Retailers can expect weeks-long delays in holiday inventory due to shipping bottlenecks, including a global container shortage and the recent COVID-related closure of the southern Chinese port of Yantian, which serves manufacturers near Shenzhen. The risk for retailers (large and small) is a rash of out-of-stock items just as shoppers are ready to open their wallets to splurge on toys, clothing and other merchandise. It's going to be a major, major mess," said Isaac Larian, chief executive of Los Angeles-based MGA Entertainment Inc, which sells LOL Surprise, Bratz, Little Tikes and other toy brands to Amazon, Walmart and Target. (Source: Reuters)

• For consumers? If ever there was a year to tackle your shopping list early, perhaps this would be the one. For shoppers of major brands like electronics, toys, household and more, be forewarned that arriving empty-handed is a likely scenario.

It will be interesting to see which retailers and brands are able to navigate these issues successfully, and how the consumer adapts to a new (and hopefully temporary) reality.

Chris Bull

Chris Bull is currently a Principal and the President at Spectas. As a Business Development Professional, Executive Leader and Owner in Retail Marketing, Chris has had the privilege of working with and for some of the most iconic brands and retailers in the world.