Logistics lag behind consumer demand ahead of holiday shopping

Shortages in supplies and labor combined with congested delivery lines and swelling shipping costs make for an uncertain retail market ahead of the winter holiday shopping period.

Bucknell University’s Jimmy Chen, associate professor of analytics and operations management, said shoppers placing orders this week for products manufactured overseas risk not receiving deliveries until after Christmas Day.

Toys, clothing, electronics all are at risk.

“For the general consumer, if we place an order right now it’s probably too late. We can only count on whatever retailers have on shelves,” Chen said.

Steve Patton, president, Watsontown Trucking Company, shared real-time shipping data for the ports of Los Angeles and Long Beach, where about 40% of containerized cargo enters the U.S. annually. More than 80 ships were at anchor in San Pedro Bay and waiting to be unloaded on Friday, nearly double an all-time record of 41 set in March.

It’d take approximately two weeks to clear the ports with no additional vessels arriving. That’s hardly likely. Two dozen more ships were en route from East Asia, according to data shared by Patton.

According to The Washington Post, Walmart and Home Depot are chartering their own ships to retrieve their products. Amazon, the Post reports, is adding to its fleet of cargo planes.

Ocean shipments from China to the U.S. took an average of 73 days to reach final destination, 89% longer compared to September 2019, according to Freightos.com, an online freight marketplace. That stands to grow as the data shared by Patton estimated freight departing Shanghai last Friday would take an estimated 90 days to reach Indianapolis.

And then there’s the cost of container transit. Estimates at Freightos.com put the average rate of a container shipment from Asia to the West Coast at $19,182 — 417% higher than in 2020.

“I don’t think people really understand what happened. This supply chain issue happened when we reopened the economy and incentivized the workforce not to participate,” Patton said, referring to enhanced unemployment benefits. “We ordered new freight trailers last year and we have yet to receive one new trailer this year.”

Seaport congestion isn’t a typical concern for consumers, Chen said, hypothesizing the current situation might speed along advances in workforce automation and other technological advances.

“We now see the phenomena it can create,” Chen said of bottlenecking at seaports.

Cascade effect

The ports aren’t the sole problem, of course. There are delays up and down the supply chain. Patton described it as a cascade effect.

“The entire supply chain, especially for imported products, is severely strained,” Patton said.

COVID-19 outbreaks shuttered manufacturing plants and shipping ports, including a major port in China this summer.

Dockworkers can’t keep pace with new arrivals of shipping containers, leaving freight liners anchored longer. Cargo volume is up 30% at the Long Beach and Los Angeles ports where officials expanded hours to pick up and return containers, according to a joint statement from the ports.

The containers are stacking up in freight yards waiting for truck drivers to haul materials to inland ports and distribution centers. That prevents turnover of specialized truck chassis to haul them, Patton said.

Labor shortages of truckers and warehouse workers keep goods from arriving as efficiently as it had pre-COVID at retailers and front doorsteps. Walmart, Aldi, Amazon and Dollar General are among major retailers each seeking to hire tens of thousands of employees.

“No matter how high the wages go up the companies can’t find people,” Chen said of sign-on bonuses and higher hourly wages at many major retail chains.

Help wanted

Only three other states employ more truck drivers than Pennsylvania. Sue Spry, associate vice president of academic affairs, Luzerne County Community College (LCCC), said the commonwealth is still falling short.

According to Spry, 126 students completed LCCC’s CDL program for commercial trucking in fiscal 2021. She said it’s a modest amount. About 85% of successful CDL students are placed in jobs right out of school, she said.

“We have a supply and demand for students but we’re still not turning out enough,” Spry said.

Logistics companies and distribution centers are turning inward, focusing on retaining employees and training them on forklifts, safety, supply chain management and leadership. The industry has experienced a surge in higher starting wages and sign-on bonuses, too.

“They can’t get enough pickers and packers, the very basic level. They’re just not finding enough people,” Spry said.

‘It’s all coming and coming’

Two downtown Lewisburg retailers spoke of how the shipping delays are impacting their own businesses.

Connie Harter of Retrah said she usually receives the bulk of her holiday merchandise by July. It’s just now beginning to ship.

Laurie Slear of The Mercantile said she traditionally orders holiday goods in February. This year was no different. What changed was that rather than requesting no shipments before Oct. 1, Slear asked that the goods be delivered as soon as it’s available.

“We’re still short but it’s all coming and coming and coming and coming. It’s relentless and stressful,” Slear said.

Slear said she worried last year about ordering too much merchandise given the economic uncertainty. Now, she’s hopeful The Mercantile will have enough inventory.

Harter said she’s struggling even to get shipments of custom shopping bags for Retrah. She’s also struggling to keep clothing stocked. It’s selling out quickly.

“We’re just trying to get anything in that we can and we are encouraging people to buy now. We don’t know what’s going to happen by Christmastime,” Harter said.


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