At this point, nearly everyone is familiar with the global supply chain issues that we just can’t seem to shake. Earlier this month, Modern Shipper wrote about how those hiccups are causing delays that will reach as far into the future as the holiday season and why you should do your winter holiday shopping ASAP. That hasn’t changed, but some products figure to be more scarce on the shelves than others.
For most American-made goods, delivery times still should be pretty quick, given the bevy of nationwide delivery services we have at our disposal like Amazon Logistics and the recently unveiled Walmart GoLocal. But for products shipped overseas, it’s a crapshoot. Modern Shipper talked to Frank Kenney, director of market strategy at B2B integration company Cleo, to dissect the landscape of holiday gifts and figure out which might be in short supply.
Due in large part to longstanding chip shortages, shoppers should expect to find electronic appliances hard to come by. Blenders, mixers, coffee makers and other appliances figure to be in short supply, especially those coming from China, where the semiconductor shortage is most pronounced.
But even at home, electronic appliances are getting more and more scarce. According to Reuters, U.S. factory production of several products, including appliances, fell due to a confluence of factors including shortages and the impact of Hurricane Ida. It’s that widespread nature of the supply chain problems that makes it so challenging for manufacturers and retailers to get their products shipped in time.
“The supply chain issues we’re currently experiencing are on a global scale. Solving the supply chain challenges we have today is comparable to playing a game of whack-a-mole – as soon as one issue is resolved, another one pops up and causes more delays,” said Kenney. “Due to the combination of ports being closed for two months and the spike in e-commerce, businesses around the world are forecasting that they require at least six months of catch-up before reaching a level of predictable service. However, that’s as long as there are no other significant disruptions – and the probability of that is extremely low.”
Parents also should start stocking up on everything from action figures to toy cars to trampolines. Since as early as June, companies like Hasbro (NASDAQ: HAS) and Mattel (NASDAQ: MAT) have been monitoring shipping delays out of China, and just a few months later, not much has changed.
According to a KPMG survey of 114 retail executives, more than 80% said they were somewhat or very concerned about a toy inventory shortage. Demand isn’t going anywhere – the survey said retailers expect holiday sales to be 7% higher than last year’s – but supply is getting squeezed like a stress ball, and that means shortages abound. A COVID spike isn’t helping matters.
“As there is an ongoing surge in the delta variant, social distancing measures are now back in place, which can slow shipping and warehousing processes down again,” Kenney said.
Want to get those new Nike Air Maxes for Christmas? Just do it – now. Sneakers are yet another item that customers might not be able to find on shelves come holiday season. Unprecedented conditions are shaking up the supply chain for the world’s largest supplier of athletic shoes, and they aren’t going away anytime soon.
Back in July, it was reported that Nike (NYSE: NIKE) had shut down two of its facilities in Vietnam, run by suppliers Chang Shin Vietnam Co. and Pou Chen Corp. According to Nike, factories in Vietnam produced around half of the company’s branded footwear in fiscal year 2020, and Panjiva, a business line of S&P Global Market Intelligence, found that the country accounted for just under half of Nike’s U.S. seaborne imports in 2Q 2021. Just this week, BTIG analyst Camilo Lyon lowered Nike from a “buy” rating to “neutral” amid ongoing closures.
It’s hard to imagine the world’s biggest sneaker manufacturer facing this level of strain, but that’s because the supply chain hasn’t faced this level of strain since World War II, according to Kenney.
“This type of strain on the supply chain has never happened before in our lifetime because the world economy has been flourishing. In the last year, in addition to the strain caused by the pandemic, we also experienced hurricanes, wildfires, social unrest and an unprecedented national election in the U.S,” he said. “All these factors added months on top of months necessary to get to the point of predictable service. Even during the Vietnam War and the Korean War, only specific regions were impacted, so the supply chain was shifted accordingly to work around those conflict areas.”
Perhaps the most talked about shortage, consumer electronics figure to be scarce around the holidays because of the massive global chip shortage. Smartphones, gaming consoles, headphones, laptops – all of these, and many more, will be among the toughest products to nab whether you’re buying online or in-store.
The chip shortage is also putting pressure on prices – as the shortfall continues, prices of already expensive consumer electronics are likely to rise. While deals in the months leading up to the holiday season should shave off some of that cost, Kenney emphasized that you shouldn’t wait if you want that new Xbox or Chromebook.
“Any product that has semiconductor chips such as smartphones and laptops will potentially be delayed since many of those chips are manufactured in China,” he explained. “The one exception to this is Apple, because it has invested a vast amount of capital to have already manufactured whatever new product it’s launching in September and will have already reserved plane space to transport the products to the U.S. market. For other smaller electronics like headphones and Xboxes, my advice is to buy them early and hide them well.”