Toy Shortage due to Supply Clogs
October 13, 2021
Toymakers warn about significant disruptions in global supply chains caused by the ongoing pandemic, the recent blockage of the Suez Canal, rising labor costs, resin shortages, and power outages in different parts of China. All these have led to higher prices and additionally strained the supply chain.
Delays in Unloading Cargo Vessels Cause Shortages
The delays in unloading ships can jeopardize the holiday season, with parents not being able to buy presents on time to tuck under the Christmas tree. In this scenario, toys could stay on shelves for months with clearance stickers.
Toymakers warn that they are already low on supplies and only able to meet about 65 percent of orders. While some had anticipated a significant growth of up to 50 percent, they now expect sales growth of about 20 percent.
Toy manufacturers are struggling with significant bottlenecks in the transportation pipeline. To begin with, the cost of shipping containers has skyrocketed from $3,200 to $20,000. And even when containers are shipped to the final destination, there are shortages of truck drivers to transport shipments.
Experts explain that it is a complex set of problems, from resin shortages and widespread power cuts in China to growing labor costs that have a chain effect. It seems that we will be struggling with the after-effects for a long time.
Toymakers Struggling to Save the Season
Truly, big businesses have more resources than small ones that are struggling to survive. Costco and Home Depot, for example, chose to contract container ships to speed up orders. Big companies also have the financial resource to place orders months in advance and secure continuous supply.
Some businesses are shipping inventory to alternative ports while others are flying cargo to expedite delivery. Still others are leaving shipments behind and hoping for costs to come down before the holiday season.
Yet, even large companies like Hasbro expect that some toys will not be shipped before the fourth quarter. And in addition to a more limited product range, customers are faced with price increases. Adding to the complex set of factors is that retailers have been forced to place bigger bets on even small shipments to cope with product shortages. It is basically the same strategy they used for the back-to-school season, resulting in higher prices and fewer choices for customers.
Toy makers say they don’t expect price increases by more than 10 percent despite the fact that this will not cover shipping costs. For them there is a lot at stake, especially in markets such as the U.S. and China, as they heavily rely on Christmas sales.
Pandemic-Driven Demand
Experts also point to the fact that consumers are increasingly looking for products that were most-loved during outbreaks and lockdowns. Such are, for example, Frozen, Paw Patrol, Grogu, and Batman. Parents are also shopping for items that encourage sensory and exploratory play, including Legos, water toys, and kinetic sand. Yet, in all likelihood, they will be faced with squeezed supply and a more limited variety.
