Backlogs in the supply chain in North America

If you thought now is too soon to start holiday shopping, think again.

A huge backlog out at sea, with over 60 container ships carrying millions of consumer goods wait to unload in California, at the ports of Los Angeles and Long Beach.

The ships extend for over 60 kilometres in the ocean. The shortage of workers at the docks, and not enough truck drivers to deliver the goods to stores, are just the most noticeable reasons.

Not everyone is sad though. This supply crunch is offering a lucrative opportunity for bulk cargo ship operators. They are cashing in on a record high in container shipping rates. Freight costs in some cases has exceeded $20,000 per box.

While the consumers may be willing to go and spend more money right now, the issue that is that there are actually not enough products out there for them. And it is also more difficult to find specific items, because even everyday products are in short supply across the US. Costco has limited how much toilet paper, bottled water, and cleaning supplies consumers can purchase.

Because of the port delays, Halloween celebration is already turning into a real nightmare for retailers. Covid-19 stopped most of the parties last year, while this year it is the supply chain backlog haunting them.

A retailer in Chicago, said that his shop is “still waiting for about 25 to 30 per cent of the merchandise to come in, that we’ve previously ordered and some of it probably won’t even ever come in before the holiday.”

Christmas is not looking too cheerful either. Many toys, clothing, appliances, electronics, new cars, and now even artificial trees are getting harder to find. Most artificial trees come from Asia, where manufacturing slowed significantly during the pandemic. Now companies cannot keep up with the demand.

Companies selling artificial trees in North America are advising customers to buy Christmas trees now, before Thanksgiving, because otherwise the shelves will be empty and trees will be replaced by “out of stocks” signs.

Retailers in Canada say stores are reporting that the situation seems to be getting worse as the winter approaches, resulting in much higher prices for consumers.

Skyrocketing shipping costs are adding to the problem. Big retailers are now chartering their own much more expensive cargo ships, but that is not affordable for smaller players.

“A lot of these smaller publishers and stores are holding inventory in China trying to wait out the freight to see if it gets cheaper. And I don’t think this is going away for at least two years,” said Carly McGinnis, CEO of the company producing the popular card game Exploding Kittens.

The Canadian toy association says inventory problems may force some businesses to cancel traditional per-holiday big sales like Black Friday and Cyber Monday. Experts say consumers need to be strategic this season: buy early and have second and third choices in mind.

To help clear out cargo, the port of Los Angeles is shifting to 24/7 service. UPS is also working around the clock, while utilising enhanced data sharing with ports. That could move up to 20 per cent more containers.

Meanwhile FedEx and Walmart are extending their night-time hours. Samsung and Target set 90-day deadlines to significantly increase their cargo movement and free up space.