Obstacles in the toy industry’s supply chain could leave the Christmas tree without gifts
One of the sectors most affected by the problems in the supply chain in different and the congestion of the ports of Los Angeles – Long Beach (LA-LB) in the USA is that of toys. Manufacturers such as Hasbro and Mattel have been especially vulnerable given their dependence on imports from Asia.
“We’re seeing [ocean freight] costs are more than four times what we’ve been experiencing,” said Hasbro CFO Deb Thomas. In the case of Mattel, the increase in costs is due to a series of shocks in the maritime market, according to the firm’s chief financial officer Anthony DiSilvestro. “During the [third] quarter, we experienced supply chain disruptions, including a shortage of shipping containers that was exacerbated by the temporary closure of a port in China and the temporary closure of plants in Asia in connection with shipping restrictions. Covid-19 “, he stated.
Added to the problems that manufacturers have faced are those of retail. The president of the Association of Toymakers, Steve Pasierb, assured that children may not have their favorite gift if the purchases are made around Christmas. “It affects us at the worst time of the year, which is the holidays,” he said, referring to the congestion of LA-LB ports and the shortage of trucks that makes transportation delayed. “We have a long, long way to go,” he added.
About 85% of the 3 billion toys sold annually in the US come from China, according to the US Toy Association, so “the best thing for consumers to do is buy right now,” he said. Marissa Silva, editor-in-chief of Toy Insider magazine.
The toys should already be in stock. But some arrive four or six weeks late, Silva explains. That means that by the time December rolls around, the shelves may be empty and stocks to replenish them may not arrive in time for Christmas gifts, even considering the measures announced by the White House (see note).
He added that there are currently delays of up to six to eight weeks in the process of shipping the toys. Typically, the most popular toys of the year for the holiday season go on sale in mid-to-late July. This, they have been put on sale just this month.
He clarified that if consumers wait to buy until Black Friday or even December, the toys that are in stock now may not be restocked. That is the great fear: that the replacement will not occur until January.
He added that a lot of the TV and YouTube ads are already up and running, so kids are already exposed to some of those trendy toys, and they’ll already have a pretty good idea of what they want.
Price hikes
Regarding prices Silva pointed out that some things, like action figures, can go up just a couple of dollars, maybe 2 or 3, depending on the brand. Much of it is because the cost of raw materials has gone up: packaging is more expensive, for example. Larger items, such as oversized dollhouses or ride-on toys, are up as much as 10%.
Executives at both Hasbro and Mattel said they expect shipping costs to remain high throughout the second half and acknowledged that they will raise prices in the second half of the year to offset logistics costs. Richard Dickson, Mattel’s chief operating officer, said “We expect that inflation to impact our second half results much more than the first.”
Plastic resins and shipping together account for only 15% of the cost of products sold by Mattel, and in the first quarter alone, each product faced an inflation rate of 35%.
Marissa Silva recommended that Consumers who regularly shop at Walmart or Target could look at the prices of toy stores, stores that tend to shop on a smaller scale and because they serve a smaller community, making it easier for manufacturers to fulfill orders.
Stocks in England are also concerned
The Christmas crisis is also being experienced in England, where, for example, specialty shops selling Harry Potter items say they are running out of stocks due to the pandemic-caused supply chain crisis, spiraling costs and delays caused by Brexit, causing products for sale to double in price.
Elvijs Plugis, co-owner of collectibles store House of Spells, told the BBC that: “First it was Brexit and then the pandemic. The combination of both, the manufacturers got scared and stopped working and could not ship large containers. by sea. “A Harry Potter wand used to cost 20 pounds, now it’s going to cost 35-40 pounds. All stores are running out of stock. “
The London Toy Company, which imports Harry Potter toys, added that it has sold out Harry Potter products as freight for containerized cargo has risen 900% and 35,000 items are stuck in ports.
Alan Simpson, CEO of Toytown, an independent retail chain, said consumers – as in the US – will have to start their Christmas shopping early this year and expect higher prices. Meanwhile, Robert Gliddon, emphasized that “it is not only a question of scarcity: we must face the reality of price increases, between 10% and 15% in everything that comes from the other side of the sea.”
(October 19, 2021)
Lack of stock and high toy prices threaten to steal Christmas
Mundo Maritimo
https://www.mundomaritimo.cl/noticias/escasez-de-stocks-y-altos-precios-de-los-juguetes-amenazan-con-robarse-la-navidad
