Supply crisis drives retail giants to hire their own ships ahead of vital holiday season

Record ID: 1640557

  • Title: Supply crisis drives retail giants to hire their own ships ahead of vital holiday season
  • Date: 6th October 2021
  • Summary: LOS ANGELES, CALIFORNIA, UNITED STATES (SEPTEMBER 31, 2021) (REUTERS) AERIAL VIEW OF CONTAINERS ON SHIP AT LOS ANGELES/LONG BEACH PORT COMPLEX VARIOUS AERIAL VIEWS OF CONTAINER SHIPS OFF COAST LOS ANGELES, CALIFORNIA, UNITED STATES (SEPTEMBER 30, 2021) (REUTERS) VARIOUS OF SHIPS AT SEA, SEEN FROM SHORE PORT OF LOS ANGELES EXECUTIVE DIRECTOR GENE SEROKA WALKING (SOUNDBITE) (English) PORT OF LOS ANGELES EXECUTIVE DIRECTOR GENE SEROKA SAYING: "The quickest route from Asia to the United States and interior points is through Los Angeles. And that's what everyone is trying to maximize at this point in time. But it's like taking 10 lanes of freeway traffic and squeezing them into five. We're still breaking records every day. The longshore clerks and foreman at the ILWU have never been on the job more. They're averaging six days per week of work since the beginning of the COVID 19 restrictions here in March of 2020. And that's why we keep moving so much cargo, but it's still more on the way and we've got to keep chipping at that." VARIOUS OF OPERATORS WORKING AT MARINE EXCHANGE VESSEL TRAFFIC SERVICE LOS ANGELES-LONG BEACH LOS ANGELES, CALIFORNIA, UNITED STATES (SEPTEMBER 31, 2021) (REUTERS) AERIAL VIEW OF THE OCEAN ANG, A DRY BULK FREIGHTER USED BY CARGILL CARLY MCGINNIS, CHIEF OPERATING OFFICER, EXPLODING KITTENS, INC, WORKING AT DESK VARIOUS OF EXPLODING KITTENS CARD GAME EXPLODING MINIONS AND THROW THROW BURRITO CARD GAMES (SOUNDBITE) (English) CARLY MCGINNIS, CHIEF OPERATING OFFICER, EXPLODING KITTENS, INC, SAYING" "We currently do have some products stuck at the Port of Long Beach. Our newest game, Throw Throw Avocado, has been there for about a week delayed and it took about 50 days to get it there, so it's already delayed. We also had a container of our most popular game, Exploding Kittens, stuck at the port of Long Beach for two weeks, and the head of my logistics team, Yalda Panah, had a great, resourceful idea, which I thought was excellent, of chartering a helicopter to come and try to pull the container out of the shipyard. We also debated renting a U-Haul to unload it ourselves. Luckily, it was finally released a couple of days ago, but it has severely impacted our pick ups for Walmart, Target, Amazon." VARIOUS OF GAMES ON SHELVES
  • Embargoed: 21st October 2021 00:26
  • Keywords: Long Beach Los Angeles cargo ships container ships holiday shopping port shipping supply chain
  • Location: LOS ANGELES, CALIFORNIA AND NEW YORK, NEW YORK, UNITED STATES
  • City: LOS ANGELES, CALIFORNIA AND NEW YORK, NEW YORK, UNITED STATES
  • Country: USA
  • Topics: Economic Events,United States
  • Reuters ID: LVA001EY1JEBR
  • Aspect Ratio: 16:9
  • Story Text: As the holiday shopping season approaches, more than 60 container ships carrying clothing, furniture and electronics worth billions of dollars are stuck outside Los Angeles and Long Beach terminals, waiting to unload, according to the Marine Exchange of Southern California.
    Pre-pandemic, it was unusual for more than one ship to be in the waiting lane at the No. 1 U.S. port complex, which handles more than half of all American imports.
    Ports are log-jammed and ship space scarce at a time when COVID-19, as well as U.S.-China trade ructions, equipment shortages and extreme weather, have exposed the fragility of the globe-spanning supply lines we use for everything from food and fashion to drinks and diapers.
    Retail giants Walmart, Target and Home Depot are chartering its own vessels in an effort to beat the global supply chain disruptions that threaten to torpedo the retail industry's make-or-break holiday season.
    Burt Flickinger, managing director at retail consultancy Strategic Resource Group, said at least 20-25% of the goods stuck on ships were unlikely to make it onto shelves in time for the Nov. 26 Black Friday kickoff of the holiday shopping season, a period when retailers make more than a third of their profits.
    "We currently do have some products stuck at the Port of Long Beach," said Carly McGinnis, chief operating officer at card game company Exploding Kittens.
    "Our newest game, Throw Throw Avocado, has been there for about a week delayed and it took about 50 days to get it there, so it's already delayed. We also had a container of our most popular game, Exploding Kittens, stuck at the port of Long Beach for two weeks, and the head of my logistics team, Yalda Panah, had a great, resourceful idea, which I thought was excellent, of chartering a helicopter to come and try to pull the container out of the shipyard. We also debated renting a U-Haul to unload it ourselves. Luckily, it was finally released a couple of days ago, but it has severely impacted our pick ups for Walmart, Target, Amazon," she said.
    Incoming cargo at the Port of Los Angeles is up 30% from last year's record levels. Trucks and trains can't remove it fast enough, leading to logjams, said Executive Director Gene Seroka, reflecting the surge in consumer demand.
    "It's like taking 10 lanes of freeway traffic and squeezing them into five," Seroka said.
    Chartered ships that offer valuable cargo space and can sidestep the container terminals play a critical role in this second pandemic holiday season, particularly for time-sensitive goods like ugly Christmas sweaters that won't sell if they arrive too late.
    Seroka, though, is optimistic.
    "I'll report to you that Christmas will happen on December 25th. Year-end holidays will also go forward as scheduled. Again, great credit to the import community for trying to pull their inventory forward. We began seeing holiday season goods move through this port in the latter part of June, as compared to traditionally August and September deliveries. We'll be in good shape. Store shelves are going to be worked out the right way," he said.
    While there may be few quick or easy fixes for the many U.S. retailers invested in Asia, there could be comparative winners and losers in the coming weeks and months.
    Companies who have successfully stocked up are better cushioned against any supply-line bottlenecks, according to Cowen and Co analysts.
    "I think the bigger retailers are in a better position because they're more financially solvent. They have the ability to get goods in quicker, earlier. Some of our major partners have been buying goods much earlier in the year to make sure that they're stocked up," said McGinnis.
    "But this is certainly going to impact the mom and pop shops. They don't have the ability to get goods in. 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."
    (Production: Alan Devall, Sandra Stojanovic, Jane Ross)
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