- Shipments from China to the US take about 73 days to reach their destination – two days after Christmas.
- The problem is only expected to get worse in the coming weeks as record backlogs meet soaring demand.
- Several major retailers have taken steps to side-step the issue, but it might not be enough.
It might already be too late to start holiday shopping.
The US receives much of its goods from overseas, in particular China, which serves as a primary source for anything from furniture and auto parts to tech and toys. It currently takes an average of 73 days for shipments from China to the US to reach their final destination, according to data from Freightos, an online freight marketplace. But, Christmas is in 71 days.
What’s more, delays are only expected to lengthen in the weeks leading up to the holiday season, rising from levels that are currently 83% higher than pre-pandemic shipping timelines.
For consumers, the lengthened turnaround times mean the longer they wait to shop, the more likely they are to face shortages this holiday season. Shoppers who are ordering goods online might also not be able to receive their items until after the holiday season has passed. While many major retailers like Amazon and Walmart are known for their well-stocked warehouses – even large companies are racing to replenish diminished inventory levels since the pandemic started.
“Shortages are guaranteed,” Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation, told Insider. “Retailers are taking a lot of steps, especially going into peak shopping season, but there’s only so much you can do.”
Earlier this week, the White House announced a 90-day plan to address the backlogs, but it is only expected to help move an extra 3,500 shipping containers a week from ports in Southern California. Meanwhile, the ports have about 500,000 shipping containers floating along the shore, waiting to dock and unload.
Storms and power outages have also slowed down shipments out of China. In the US, massive backlogs at key ports, railroads, and warehouses have companies scrambling to find new ways to bring in goods. At the same time, the entire industry has been faced with a shortage of truckers and warehouse workers.
UBS analysts noted Thursday that the supply chain has become so fragile since the coronavirus pandemic started that even minor disruptions of one to two weeks “could result in meaningful disruption” this holiday season.
The CEO of a mid-sized toy company, Basic Fun, told Bloomberg earlier this month that his company has about $8 million or 140 shipping containers worth of goods waiting at a single factory in Shenzhen alone.
“I got Tonka trucks in the south and Care Bears in the north,” Jay Foreman, Basic Fun’s CEO, said. “We’ll blow last year’s numbers away [in sales], but the problem is we don’t know if we’ll get the last four months of the year shipped. The supply chain is a disaster, and it’s only getting worse.”
A recent survey from UKG, a workforce-management group, found that about 85% of retailers expect supply-chain disruptions to affect customers.
Many executives were warning customers to order their holiday shopping goods in August and September. Last month, Nike warned investors that they expected there would be shortages of popular products like sneakers due to factory shutdowns overseas and shipping delays.
“I half-jokingly tell people, ‘Order your Christmas presents now because otherwise on Christmas Day, there may just be a picture of something that’s not coming until February or March,'” UPS President Scott Price said in August.
On Wednesday, Insider reported “supply chain” has become a hot topic in investor meetings. Several major companies have attempted to side-step supply-chain snags. Earlier this month, Coca-Cola announced it was chartering bulk shipping vessels usually reserved for transporting raw materials like coal and iron.
Other companies like Walmart said they have started chartering smaller vessels to avoid backlogged ports like those in Southern California, while Home Depot, Nordstrom, and Levi have shifted to using more air cargo planes.
“Our intent is to meet consumer demand,” Levi CFO Harmit Singh told investors earlier in October. “And economically, if you have to air freight, we will air freight to meet that.”