Toymakers worry congestion will lead to holiday inventory troubles

Date: Friday, September 24, 2021
Source: Supply Chain Dive

Dive Brief:

  • Rising port congestion has toymakers worried their products won't make it onto shelves by the holiday season, Ed Desmond, vice president of The Toy Association said during a virtual press conference with the Port of Los Angeles.
  • "If people go out to those major retailers, they will see the toy shelves are pretty well-stocked. We don't know how long that will last," Desmond said. "One issue we do fear is that you may not see the same breadth of selection heading into the fall shopping season."
  • Cargo volume at the Port of Los Angeles increased 30% in 2021 compared to the same time in 2020, according to port data. And as congestion grows, the time it takes to ship products from China to the U.S. increased by an average of 73 days in September, up 83% from pre-pandemic figures in September 2019, according to Freightos.

Dive Insight:

Whether a toy is manufactured in China or sourcing materials are imported to make a toy in the U.S. it faces the same dilemma: Companies aren't getting their cargo on time as containers sit at ports or in terminals for more than 30 days in some locations.

The delays are due to a congested freight environment, which has resulted from a blend of lack of cargo space onboard vessels, lack of containers, lack of chassis and driver shortages. "We continue to seek solutions because it's not one single issue and it's a global issue," Desmond said.

There are similar delays across other supply chains. Affected retailers are taking action to expedite inventory such as doubling orders in advance before the holiday season.

But sourcing materials is also an issue. More than 60% of manufacturers are reporting resin shortage, according to survey data from AlixPartners.

"A particular member of ours contacted me recently. They make a number of plastic toys and products for kids — they can't get resin anywhere. And that’s just one example of an American manufacturer," said Desmond.

Toy manufacturers said in Q2 they were using various tactics to avoid delayed holiday shipments.

"We simplified the operation," Mattel CEO Ynon Kreiz said in July's Q2 earnings call. "We closed four plants. We reduced the number of items that we make, those are the items that were not productive and overall turned our supply chain to be a real driver."

Hasbro has sourced products earlier than usual, as other retailers have done as well.

"This includes sourcing more products earlier out of multiple countries, increasing the number of ocean carriers we work with and utilizing more ports to expedite the delivery of our product from their origin to destination points," said Deb Thomas, Hasbro vice president and chief financial officer during July's Q2 earnings call.

To help manage congestion, the ports of Los Angeles and Long Beach have announced they will extended hours for trucks to pick up and return containers.

 

[Read from the original source.]