Snarled shipping lanes could mean empty shelves come holiday shopping time
A perfect storm of events around the globe is leading to snarled shipping lanes on the high seas — and could mean coal in the stocking this Christmas.
Pandemic lockdowns, followed by a burst of demand once things have opened up — along with labor shortages and extreme weather events — have all combined to wallop the global supply lines of everything from food and fashion to drinks and diapers.
Some retailers are looking to take matters into their own hands.
Craft retailer Jo-Ann Stores is floating a plan to lower its astronomical shipping costs by looking into buying its own ship, The Post has learned. A container full of goods now costs the retailer around $30,000 to ship from Asia — compared to $3,000 before the pandemic, CEO Wade Miquelon told The Post.
That’s why Miquelon said his 850 stores could join a small but growing number of retailers that are looking to secure their own private freight ships.
Such a move could come in the form of buying a vessel — likely with a group of other retailers — or leasing a ship, Miquelon said.
“Those options are being looked at long-term to mitigate at least some of the risk we are facing” when it comes to the sharply rising shipping prices, he said. “We have had to spend many tens of millions of dollars” more on shipping than ever before. He declined to give details on the costs of the possible options to either buy or lease space on a ship.
It’s not just Jo-Ann that faces astronomical shipping bills. Shipping costs and long delays at ports have wreaked havoc on other retailers, too.
This summer, some much larger retailers, including Home Depot, Walmart and Ikea, began chartering private vessels to use exclusively to ship their own merchandise from overseas.
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 US port complex, which handles more than half of all American imports.
The global sea networks handle 90 percent of the world’s trade.
US retailers’ traditional lifeline from Asia is freezing up due to a resurgence of COVID-19 in countries like Vietnam and Indonesia plus a power-supply crunch in China. The supply snarls coincide with booming demand as consumers spend more on goods than going out, and the festive shopping frenzy nears.
Burt Flickinger, managing director at retail consultancy Strategic Resource Group, said at least 20 to 25 percent of the goods stuck on ships were unlikely to make it onto shelves in time for the Nov. 26 Black Friday kickoff for the holiday shopping season. Want that new video game console or television for Christmas? You may not be able to get it.
Incoming cargo at the Port of Los Angeles is up 30% from last year’s record levels. Meanwhile, trucks and trains can’t remove it fast enough, leading to logjams, said the port’s 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.
And a national shortage of semi-truck drivers isn’t helping things. A trade association says the industry is short 61,000 drivers.
The logjam is likely to hit consumers’ pocketbooks: Bottlenecks in the supply chain could lead to out-of-stock items. And Americans freed from a year of lockdown are ready to spend.
Even officials at the Federal Reserve are taking notice.
“We have these really anxious-to-get-out-there-and-spend consumers hitting the wall of supply constraints — and of course, the prices are going to rise,” San Francisco Fed chief Mary Daly said on CBS’s “Face the Nation” on Sunday. Recent reads on inflation are at 30-year highs — with prices rising 3.6 percent over last year.
“There’s probably going to be some pressure on holiday item prices,” she said, “and we’re going to have to continue to get through that.”
With Post wires
