Daily Management Review

Christmas Holiday Toy Market Threatened By Supply-Chain Snarls


Christmas Holiday Toy Market Threatened By Supply-Chain Snarls
Toy suppliers and retailers in the United States and elsewhere are racing against time to tackle severe air, sea and land shipping shortage ahead of the Christmas season.
A major portion of the total annual sales of almost $33 billion comes during the holidays, and the top selling toys last year included LEGO blocks, MGA Entertainment's L.O.L. Surprise dolls, Mattel's Barbies and Sony's PlayStation game consoles.
The currently ongoing issues with the global supply chain could result in consumers returning empty handed from online platforms and stores as well as loss of sales for retailers like Walmart and Target where some gaps in shelves for seasonal items – ranging from school supplies and backpacks to Halloween decor and costumes, were noticed in recent months.  
According to a report by Reuters, the result of the disruption in the global supply chain meant some of the leading toy makers - including MGA, Kids2 and Funko Inc, being forced to use costlier cargo planes to ensure supplies, routing shipments through new seaports that were functional and requesting retailers such as Target in the U.S. to get their own supplies.
Jason Miller, associate professor of supply chain management at Michigan State University's Eli Broad College of Business. Import of dolls, toys and games –key components of the toy market, into the United States in the first seven months of 2021 was an average of $1.88 billion per month. That was 50 per cent more than for the same period of 2019 prior to the pandemic.
Miller noted that the import of toys in the first seven months of 2021 was a record in comparison to data records going back till 2002.
"There is more demand than we can supply," Isaac Larian, CEO of California-based MGA, said, referring to retail orders.
In order to secure supplies, their own ships have been hired by Walmart and Target.
Supplies of Mattel Inc got disrupted, the toy maker had warned in July, when an acute shipping container shortage was compounded with temporary port and plant shutdowns in Asia because of the resurgence of Covid-19 infections.
In order to overcome delays of transportation by seas – which can take even months to arrive, products are being flown in by many toy sellers including MGA.
According to calculations done by Frederic Horst, managing director of Cargo Facts Consulting in Australia, the import of toys into the US in terms of weight for the first seven months of this year was double that of the same period of 2019. A large part of that higher volume of imports in weight was accounted for by pricey video game consoles – indicating the year to one another one where there was likely to be a strong demand for the likes of PlayStations and Microsoft's Xboxes.
"There's no capacity left, it almost would take a miracle for you to find a charter between now and the end of November, early December," Jones Shah said.
Cargo ships cannot be easily replaced by flights simply in terms of the volume that they can carry at once and therefore toymakers are adjusting their strategies for ocean shipping so that the global supply bottleneck can be averted.