COVID-19 lockdowns, crowded cargo ports leading to holiday shortages
From the COVID-19 pandemic to cargo backups at California ports, there are a few reasons why Americans could find holiday shopping challenging this year.
The more transmissible delta variant shuttered the economy in Asia including Bangladesh, where many clothing factories temporarily closed over the summer. Bangladesh’s clothing factories are part of the world’s second-largest garment industry. Since the pandemic started in March 2020, the Bangladesh Garment Manufacturers and Exporters Association estimates the industry lost $3 billion in orders last year.
Then there are the cargo backups.
According to FOX 11 Los Angeles, the backup in cargo is expected to leave a wide-ranging impact, possibly delaying the shipment of merchandise and other consumer items for the holidays.
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According to The Wall Street Journal, tens of thousands of containers are stuck at the ports of Los Angeles and Long Beach, California, the two West Coast gateways that move more than a quarter of all American imports. More than 60 ships are lined up to dock, with waiting times stretching to three weeks.
Participants in each link in the U.S. chain – shipping lines, port workers, truckers, warehouse operators, railways and retailers – blame others for the imbalances and disagree on whether 24/7 operations will help them catch up. All of them are struggling with a shortage of workers, according to the Journal.
COVID-19 outbreaks, lockdowns and cargo backups have also impacted Nike. The Wall Street Journal also reported the sneaker giant’s revenue growth is being limited by supply-chain disruptions that have slowed the production and delivery of shoes and other goods around the world.
"We’re not immune to the global supply-chain headwinds," Nike finance chief Matthew Friend said on a conference call. He said the company lost 10 weeks worth of production in Vietnam due to lockdowns there after a surge in COVID-19 cases and that it is taking an average of 80 days to move products from Asia to North America, or twice as long as before the pandemic.
The outlet reported that Nike executives said that the amount of time it takes to move a cargo container from Asian factories to North America is now about 80 days, or twice as long as it was before the pandemic.
More than half of Nike’s footwear and about a third of its apparel manufacturing occurs in Vietnam, where local authorities recently extended a lockdown until at least Oct. 1., according to the outlet.
RELATED: Port of Los Angeles seeing cargo backups amid surging consumer product demand
In response to the backed-up ports, Costco is chartering its own container ships to transport goods between Asia and North America. The retailer said it's been seeing the biggest delays within its furniture, toys, computers, tablets, video games and major appliance categories.
The company is also putting limits on key household items like toilet paper and water, which have seen an uptick in demand due to the pandemic.
Retail experts say it's best for Americans to start their holiday shopping early givien the kinks in the global supply chain.
"Getting ahead of the curve on holiday shopping is crucial this year. Many toymakers such as Mattel and tech manufacturers alike are struggling to navigate the supply chain and keep shelves stocked," said Brett Rose, the founder and CEO at United National Consumer Suppliers. "Unfortunately, this also means they are struggling to keep prices down. Once the prime shopping season comes around, it will be too late for most."
FOX Business and the Associated Press contributed to this report. This story was reported from Los Angeles.