Toy makers face logistical odyssey ahead of Christmas

The journey of Tonka’s Mighty Dump Truck from its manufacturing site in Asia to stores in the United States is an example of the adventures that small toy manufacturers are having to make to survive 2021.

What used to be a $ 2 cost to ship the toy from China to Los Angeles is now up to $ 12 – that’s half its tag price and clearly affects its maker’s profit. Basic Fun, a Florida-based midsize company that has been preparing for battle this holiday season.

“We cannot relax in any of the steps”Said the CEO, Jay Foreman, In an interview. “We have to monitor each of the stages of the supply chain ”.

Given this, Basic Fun, also known for the Lincoln Logs and K’Nex construction sets, as well as the Care Bears, created two “war rooms”In Hong Kong and Boca Raton, Florida, where 18 employees work shifts 24 hours a day.

From there, teams coordinate every step of the once-boring logistics process, from picking orders at a factory in China to making sure they leave warehouses in Los Angeles and New Jersey and hit the shelves of retailers.

This year, each of those centers is moving with greater urgency to secure places in containers and ships that make the trip across the Pacific in a journey of between 15 and 20 days.

In normal times, it’s a daunting task, but this year it’s accentuated as the $ 37 billion industry, as measured by the market research firm NPD Group, experiences one of the greatest toy demands in modern history.

In September, the dollar amount of toys, games and sporting goods imports to the United States was only dwarfed by shipments of pharmaceuticals and cell phones in the consumer goods category. Even the heavyweights of the industry Hasbro Inc. and Mattel Inc. They have said they will be able to keep up, thanks in part to their ability to expand shipping capacity and secure access to additional ports.

Foreman does not have the same resources. Control of around 80% of the global maritime market and 95% of trans-Pacific routes are concentrated in the hands of nine companies based mainly in Asia and Europe, according to S&P Global Platts, which exert almost total control over prices. Currently the costs to ship a 40-foot container from China to the West Coast range from $ 10,000 to $ 15,000 on the spot market, more than five times the rate before the pandemic.

“It’s like when it rains in New York City and you try to get a taxi or an Uber. Rates go up and it’s harder to getForeman said. “But if you are Goldman Sachs and have an account with a car company, you can call them and they will be there.”.

Congestion at U.S. ports is not easing, forcing some like Connie Gee, a San Francisco-based University Games logistics specialist, to change tack. It has shifted shipments from Los Angeles to Prince Rupert and Vancouver in Canada because these ports are less likely to experience delays, although it takes up to five more days to get the toys to the company’s distribution center in Memphis, Tennessee.

And since University Games is struggling to find workers in America’s tight job market, the company’s president, Bob Moog, sent his entire sales team in mid-November to label the packages by hand.

On the other hand, the manufacturing sector has had problems in China, where 83% of toys worldwide are manufactured, according to Richard Gottlieb, founder and executive director of the consulting firm Global Toy Experts. Local conditions are worsening amid higher price components, according to the latest industry reading. Labor shortages don’t help either, and inventory levels and delivery times continue to deteriorate.

But this holiday season could be different. Foreman of Basic Fun said he anticipates a January “enormous”As customers charge gift cards and try to get what they couldn’t get on the 25th. Its staff will work 24 hours a day, 7 days a week until the end of the year to send or receive everything by 2022.

“The difference between having a good year and a great year is yet to be definedForeman said. “And for us, and I think for many manufacturers, that is based on what we manage to get off the ships and deliver”.