As a result of the Covid-19 pandemic which brought worldwide closures, shut-downs, lock-downs and layers of additional government regulations, many retail operators are bracing themselves for what could become big shortages of merchandise for the Christmas Holiday shopping season.
Target, Walmart, Amazon.com and other retailers reported to Reuters News that they were attempting to place holiday orders for goods as early as possible this year. Besides backlogs in the manufacturing sector, shippers are facing major hurdles trying to keep up with soaring demand for container space on ships transporting goods over the oceans.
Across the globe, shipping ports are backed up, shipping containers are scarce and ships are experiencing delays entering ports and unloading goods. The Port of Los Angeles is experiencing record high volumes of container processing. Adding to these delays, China recently shut down or minimized operations at three major shipping ports due to a rise in Covid cases. In the U.S., once containers are unloaded there is a fight for the limited number of chassis available. Chassis are used to mobilize the large steel boxes for truckers to haul to their destination. Beyond these problems, truckers are in shorter supply as more veterans quit or retire and the younger generation has less interest entering the trucking business as a career, thus diminishing the number of truckers overall.
All of these situations are putting intense pressure on the price of goods. The rate to ship a 40′ container from Shanghai to Los Angeles was recently quoted at $9500.00. One year ago, the same rate would have been under $3000.00. The cost of container rentals has seen large increases as have chassis rentals, trucking and shipping costs. Some US importers report their containers getting bumped from ships because other parties offer a higher bid for the ship space days or even hours before the ship sails. Additional surcharges imposed by shipping operators are also adding fuel to the demand fire.
Whether it’s toys, computers, electronics or clothing, many retailers and suppliers are warning customers to shop early this year. Others are quick to point out that they don’t expect much in discounting either. When there is a shortage of goods along with high demand, there isn’t a compelling reason to do offer sales. This year, retailers are facing lower margins to begin with. Many are absorbing as much of these cost increases as possible to remain consistent and competitive, but at some point they must wave the white flag and surrender. If they don’t make a profit, they don’t have a business.
One retail operator who ships packages regularly through her online business expressed disappointment with parcel carriers like UPS and FedEx. She stated that these carriers raise their prices each and every year, but also add additional surcharges in some situations during the holiday season. She explained how FedEx adds a $26.00 surcharge on top of existing rates for packages over 50 lbs. She sells over a dozen outdoor items on her website that weigh around 60 pounds and says she is absorbing the additional cost, but isn’t sure she can do so much longer. Her product costs have already risen 10-18% on average because manufacturers are experiencing raw material and labor cost increases. Add that to rising import and shipping rates, growing packaging costs, her own higher labor costs and domestic carrier shipping costs, she adds “we only have so much profit to work from and all of these outside issues are eating away at the pie. There is barely any left at the end of the day.” Inflation has certainly been in the news over the past few months and while the Federal Reserve is dismissing it as transitory, many others, especially ones running businesses are losing confidence and believe higher prices are here to stay.
Many businesses are also struggling to find labor. Advertisements for help are at near all-time highs, but roughly 16 million people are still at home accepting some form of government assistance left over from stimulus bills and subsidies. Whatever the reason, and people do have reasons for not wanting or not being able to work, the situation doesn’t seem to be ending in the near future.
Chopa Zen Home has been working diligently with our providers in Japan to continue offering fine kimono and yukata to our customers throughout the Pandemic and we will work hard to do so in the future. Japan is still facing capacity issues with lock downs and partial closures. We have rearranged and restructured our production schedules to better align with their manufacturing abilities. If a select fabric or print isn’t available, we back order it and move on to what is deliverable. We have also faced large shipping cost increases and so far, have absorbed these. In fact, we recently reduced our standard ground shipping cost to just $6.95 and continue to offer Free Shipping on orders of $75.00 or more within the USA. Rather than getting bottlenecked at shipping ports and having orders delayed for weeks or months, we have mainly turned to Air Freight to obtain our shipments directly. It is much more expensive than Ocean rates, but allows us to maintain a broader and more diverse inventory on a regular basis.
While we don’t anticipate shortages of kimono and yukata per se, we would encourage customers to shop earlier. While receiving smaller monthly shipments throughout the year, we rely on large quantity shipments in the Spring, Summer and Fall. Our annual Fall shipment normally arrives in time for the Christmas shopping season and allows us to offer a great selection of styles, patterns and sizing. But we are well aware of the many obstacles facing retailers this year and sometimes events occur beyond our control. We normally publish an extended return window well before the Holiday gift buying season which allows you to shop early and still be able to return or exchange a robe after Christmas. As always, we welcome feedback, ideas, comments and the like. Use our online contact form to send us a message, post below on this Blog or visit us on Social Media like Facebook, Twitter, Instagram and Pinterest.
Photo courtesy of Andrea Piacquadio.
