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Consumer Products

The toy shipping issue explained

Growing consumer demand has outstripped the shipping industry’s capacity, leading to delays and price increases. So what are toycos to do?
October 14, 2021

In a world accustomed to same-day shipping, waiting is not something most consumers are used to. But ongoing disruptions to the supply chain have caused major delays for the shipping industry, and it’s looking like kids could be waiting a while for their toys to arrive this holiday season.

“There is more demand than there is supply,” says Mark Szakonyi, executive editor for The Journal of Commerce, a division of IHS Markit.

According to data from the United Nations Conference on Trade and Development, around 80% of global trade, by volume, is carried by sea. But because of border restrictions, lack of space on ships and logjams at ports worldwide, deliveries are being delayed, and prices are up.

In August, Swiss global transport and logistics company Kuehne+Nagel reported that 353 container ships were stuck outside various international ports. Logistics platform project44, meanwhile, has reported that delays for ships operating the route between China and non-West Coast ports in the US increased to 2.44 days in July 2021, up from 0.6 days for the same month in 2020.

Compounding these issues, the industry faced several major obstructions this year. In March, the MV Ever shipping container became wedged across Egypt’s Suez Canal, blocking all traffic in the major waterway for six days.

And in June and August, services were temporarily shut down at major shipping hubs in China as the Delta variant continued to spread globally.

All of this has caused prices to rise at an alarming rate. In the past, Szakonyi says shippers would pay a rate of around US$4,000 per FEU. (The forty-foot equivalent unit, or FEU, is the measurement of volume of a 40-foot- long shipping container.) In recent months, however, he says shippers have been paying upwards of US$27,000 per FEU—a whopping 575% increase.

“Shippers are bidding up the market [in an attempt to get their products transported], and the container lines are adding surcharges and different premiums that you have to buy in order to get your cargo onto the shipment. Shippers that already have contracts with their container line—they’ve signed a contract for this cargo—are finding they can’t get their allocations honored because the demand is overwhelming,” he says.

If toymakers and their licensing partners aren’t working extra time into their supply chains, they will have to spend even more money on ground transport to get those products to their destinations on time or risk losing sales, Szakonyi explains. And as hectic as the months leading up to the holiday season will be, he predicts the first quarter of 2022 will be equally stressful for the industry as toymakers and retailers struggle to restock their inventories.

“Based on the forecasts from analysts, we are expecting there to be elevated import volumes through early 2022. I wouldn’t be surprised if it goes throughout the whole year,” Szakonyi says. “Even if there is a slowdown in consumer demand, the amount of inventory that needs to be rebuilt means that importing will continue to be strong. I think the pressures will hopefully lessen in terms of capacity being outstripped by demand, but I think it’s pretty safe to say that the pressures will continue throughout next year.”

About The Author
Elizabeth Foster is Kidscreen's Copy Chief & Special Reports Editor. Contact Elizabeth at efoster@brunico.com

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