Brace yourself: Retailers are going to be short of everything this fall as COVID-related supply chain disruptions get worse

Shutting down the world economy has had a far greater impact on global commerce than most people could have ever imagined, and the really bad news is, things are only going to get worse — a lot worse — before they get better.

Sending billions of people home while ordering their businesses and factories and industries to shut down instead of finding safe ways to allow them to continue working instead has led to the biggest retail shortage since World War II, and there are a number of reasons for it.

For one, when people are not at their jobs, they don’t producing anything. Throughout much of last year, hundreds of millions of workers around the world weren’t mining, they weren’t pumping oil, they weren’t manufacturing finished products, they weren’t delivering products to market, and they weren’t around to stock shelves for those products to be sold.

As economies restarted, those same businesses and industries found that their former workers, many of them, had moved on to take other positions, often in unrelated industries and sectors, leading to massive shortages of just about everything, as Reuters reported recently:

Suppliers to Walmart, Target, Amazon.com and other major retailers told Reuters they are placing holiday orders for Chinese-made merchandise weeks earlier this year, as a global shipping backlog threatens to leave many gift buyers empty-handed this Christmas shopping season. ?

Reuters surveyed nearly a dozen suppliers and retailers of everything from toys to computer equipment in the United States and Europe. All expect weeks-long delays in holiday inventory due to shipping bottlenecks, including a global container shortage and the recent COVID-related closure of the southern Chinese port of Yantian, which serves manufacturers near Shenzhen. ??????

The risk for retailers is a rash of out-of-stock items just as shoppers are ready to open their wallets to splurge on toys, clothing and other merchandise.

“It’s going to be a major, major mess,” Isaac Larian, chief executive of Los Angeles-based MGA Entertainment Inc, told Reuters. His company sells LOL Surprise, Bratz, Little Tikes and other brands of toys to giant e-tailer Amazon, and other brick-and-mortar retailers like Walmart and Target.

In his case, it’s not as though there aren’t any products to sell; there are. But they are stuck inside containers on container ships that are bottlenecked at major American ports in Los Angeles, New York City and elsewhere because dock hands are in short supply as are equipment operators and truck drivers.

And if wholesalers like Larian can’t get products off-loaded and to his clients, “it’s going to hurt the Christmas sales big time,” he told the newswire service.

“Products are piling up on factory floors, in warehouse parking lots, on seaport docks and at rail yards — threatening more backups than last year’s holiday ‘shipageddon,’ when many items arrived after Christmas,” Reuters added.

And here’s something else that’s taking place: Demand is high now because more people are working again but they’re competing for fewer products. That is a very big reason why inflation is present and rising. Also, because of the demand, it’s impossible for retailers to build up any inventory because products are being purchased as quickly as they become available. And if there isn’t any inventory, then there will be massive product shortages again this fall.

“We’re hundreds of containers behind where we should be at this point,” Balsam Hill CEO Mac Harman, whose company sells high-end Christmas trees and other holiday products, told Reuters. He said he might not get much of anything in time for his July sales kickoff, and many products that are coming from China, like the trees, may not get here before Christmas, Reuters reported.

“We are already starting to order more stock now knowing that by September-October, we have to be prepared. It gets busy in the run-up to Christmas with the restaurant trade, and we are having to bite the bullet and try and rush in stock,” added Michael Shah, CEO of Britain-based Easy Equipment, which sells catering equipment in the United Kingdom.

Sources include:

Reuters.com

Computing.news