LOS ANGELES / LONDON, June 29 (Reuters) – Suppliers to Walmart (WMT.N), Target (TGT.N), Amazon.com (AMZN.O) and other major retailers have told Reuters they are switching Chinese-made holiday orders. weeks of merchandise earlier this year, as a global shipping backlog threatens to leave many gift shoppers empty-handed this Christmas shopping season.
Reuters polled nearly a dozen suppliers and retailers of everything from toys to computer hardware in the United States and Europe. All expect multi-week delays in holiday stocks due to shipping bottlenecks, including a global container shortage and the recent COVID-related closure of the port of Yantian in southern China. China, which serves manufacturers near Shenzhen.
The risk for retailers is a rash of out-of-stock items, just as shoppers are willing to open their wallets to splurge on toys, clothing, and other merchandise.
“This is going to be a major mess,” said Isaac Larian, managing director of Los Angeles-based MGA Entertainment Inc, which sells LOL Surprise, Bratz, Little Tikes and other toy brands to Amazon, Walmart and Target.
His company has toys stuck in hundreds of containers at Yantian Port. If he can’t get enough inventory for his retail customers, “it’s going to hurt Christmas sales a lot,” Larian said.
The shipping congestion is due to more than the backlog at Yantian, which is considered Amazon’s No.1 Chinese seaport, – accounting for 32.4% of shipments handled by the e-commerce company over the course of the three months leading up to May 31, according to S&P Global Panjiva, the market intelligence business data company.
While the port of Yantian reopened on June 24, a container shortage still restricted full activity, cargo ships are globally overbooked, containers are stuck in the wrong places and ports are congested.
Proceeds are piling up in factories, warehouse parking lots, seaport docks and train stations – threatening more backups than last year’s “shipageddon” holidays, when many items arrived afterwards. Christmas.
Amazon and other retailers did not respond to requests for comment.
‘IMPOSSIBLE TO BUILD THE INVENTORY’
Retailers typically sell goods as fast as they can get them, said Jason Miller, associate professor of supply chain management at Michigan State University’s Eli Broad College of Business.
“Their sales are so high right now that they are unable to dramatically increase inventory levels,” Miller said.
If this steamy clip continues, retailers – excluding auto-related operators – would need to add an estimated $ 65.1 billion in inventory to end up in the same inventory position relative to pre-holiday sales. they were in 2019, he said.
Andy Bond, managing director of the Pepco Group, which owns UK low-cost retailer Poundland, separately told Reuters: “This is definitely a daily challenge and headache we face.”
Clothing vendors are considering air freight as an option, including PVH Corp (PVH.N), which owns the Tommy Hilfiger and Calvin Klein brands.
Christmas-themed inventory “could be there for Thanksgiving weekend – and it might not be,” said Mac Harman, CEO of Balsam Hill, which sells artificial Christmas trees. high end and other holiday decorations. Some of its orders from China might not arrive in time for its sales to kick off in July – or even by Christmas, he said.
“We have hundreds of containers behind where we should be at this point,” he said, with at least 10% less product in stock.
Michael Shah, CEO of UK-based Easy Equipment, which supplies catering equipment across the UK, is rushing to bring in goods early after already facing stranded containers in China.
“We are already starting to order more stock now, knowing that by September-October we have to be ready,” Shah said. “There are a lot of people heading into Christmas with the restaurant business, and we have to bite the bullet and try to rush into stock.”
Carly McGinnis, head of production, sales and logistics at Exploding Kittens, wants to make sure big retailers like Walmart and Target don’t run out of their games. The Los Angeles-based company is making more games this year and started shipping holiday orders in March, about four months earlier than in 2020.
It also gives Walmart and Target the ability to import some of their own orders. Since both retailers are among the top US importers of containerized cargo, they can gain priority access to containers and space on freighters.
“I have told our investors and my internal team that something will be out of stock – there will be a problem. I don’t know when and I don’t know what it will be, but it will definitely happen,” McGinnis said.
Meanwhile, Bernie Thompson said he has given up hope of a vacation restocking of laptop docking stations and other computer equipment he sells through Amazon and other retailers. This is because it can take over 12 months to get some of its top selling products, which rely on hard to find computer chips.
“It’s too late for Christmas,” said Thompson, founder of Washington-based Plugable Technologies.
Additional reporting by James Davey in London, Anna Ringstrom in Stockholm and Muyu Xu in Beijing; Editing by Nick Zieminski
Our Standards: Thomson Reuters Trust Principles.