The cost of delay
How your holiday shopping cart explains the damaged global supply chain
This holiday season, just about everything that ends up in your shopping cart has taken a tumultuous journey through the world’s mangled supply chains. Some items that should’ve arrived months ago are just showing up. Others are tied up at factories, ports and warehouses around the globe, waiting for shipping containers, planes or trucks to transport them where they belong. And because of this, prices across the board are rising on many holiday items.
To show how some of the most popular products this year have been affected by this global upheaval, The Washington Post dug into the backstory for four top sellers: a puffer jacket produced by Primary, a kids apparel company; the electronic Got2Glow Fairy Finder, a WowWee toy that’s expected to be one of the hottest this year; an artificial Christmas tree manufactured by the National Tree Co.; and a sparkling wine sold by the Francis Ford Coppola Winery.
From semiconductor delays to shipping hurdles, from worker shortages to covid-shuttered factories, come learn why this holiday shopping season will be like none other.
Primary’s lightweight kids puffer jacket comes in a dozen colors and now takes more than a dozen weeks to make its way from fabric production in China to assembly in Vietnam and then to the United States, where it sells for $48.
The jacket’s four-month journey — by truck, boat, and sometimes plane and rail — shows just how deeply the pandemic has impaled the world’s supply chains. By the time the puffer arrives at consumers’ homes this year, it will have hit a snag at just about every step along the way. Mills and factories are understaffed. Ports are congested. There aren’t enough shipping containers to move the products across the Pacific or Atlantic.
“The whole world shut down last year and it’s like we’ve been dodging bullets from every direction ever since,” said Marienne Hill-Treadway, Primary’s chief supply chain and merchandise officer. “We’ve pivoted so many times — from one country to another, one mill to the next — that we have whiplash.”
In early May, when executives learned coronavirus vaccination efforts in Vietnam were falling behind, they rushed to get finished products out of the country. Instead of waiting for ships to make it through clogged ports, Primary paid a premium to fly popular holiday staples like puffer jackets and pajamas (for kids, adults and dogs) to the United States. The move cut into the company’s profit margins but ensured that it had enough merchandise to kick off the holiday buying season.
Expenses have risen significantly in the last year, leading the New York-based retailer to raise the price of its puffer by $3. Even so, Hill-Treadway says that hasn’t been enough to offset long-term costs. Just about every part of the jacket, including its recycled polyester lining, elasticized trim and zipper, have become more expensive. And the cost of shipping goods across the ocean has more than tripled so far this year: From 16 cents per product in January to 55 cents in August.
“You don’t know from one day to the next where covid is going to rear its ugly head,” said Hill-Treadway.
Hot electronic toy
Got2Glow Fairy Finder
*Based on average shipping times for WowWee’s electronic toys
Sydney Wiseman got the idea for a light-up “fairy finder” jar in early 2020, just before the pandemic forced the world to shut down.
Wiseman, who works for the toymaker WowWee, is no stranger to figuring out what kids want. Her last big hit, Fingerlings — a 5-inch robotic monkey that sold for $15 — was the “it” holiday toy of 2017.
This time around, she planned to combine technology and fantasy to create a light-up jar players could use to “catch” virtual fairies. Once inside the jar, the fairies could dance, play games and interact with viewers through an LED screen. Players could also trade fairies between two jars.
But just as she was preparing to bring the idea to life, toy production came to a halt. The company’s factories in southern China closed for weeks, then reopened at partial capacity. Covid-related shutdowns and spikes in demand for cars, appliances and other high-tech products also made it difficult to secure raw materials. All of a sudden, the components that made the fairy finder magical — lights, integrated circuit chips, LCD screens — were in short supply.
The wait for chips and screens tripled to 180 days as factories rushed to keep up with pent-up demand. Lights took 100 days to track down.
“Little did we know the world was going to go into a frenzy,” said Wiseman, vice president of brand development and creative strategy for toymaker WowWee.
Wiseman, who would’ve typically spent three or four months in Hong Kong overseeing the product’s creation, was limited to overnight phone conversations with developers during the pandemic. She eventually moved from Montreal, where WowWee is headquartered, to Los Angeles, where the time difference was better-suited to calls with Asia.
In October 2020, just as manufacturing was kicking off, the company’s supplier in Taiwan alerted executives that it couldn’t find integrated circuit chips or workers to program them in time to meet WowWee’s deadlines. Executives scrambled to track down a new supplier and finally found one in Hong Kong that happened to have extra chips stored in its warehouse. But that switch came with a premium of about 30 cents per chip.
“It’s feast or famine when you’re launching a new brand: It’s either a hit or it dies in year one,” said Michael Yanofsky, the company’s managing director of sales. “And with covid, it was like a gun-to-our-head situation, having to make these big decisions even before you know how it’s going to do on the shelf.”
But even as complications mounted behind the scenes, early signs pointed to a hit toy: Retailers were immediately excited about the Got2Glow Fairy Finder. Big-box chains placed large holiday orders. Target and Amazon added it to their hot toys lists and catalogues. “We got immediate validation that we were onto something really big,” Wiseman said. (Amazon founder Jeff Bezos owns The Washington Post.)
The toy hit stores shelves in August and quickly sold out in many places. But many early challenges, including supply shortages and shipping delays, persist. WowWee, which expects to sell hundreds of thousands of Got2Glow Fairy Finders during the holidays, says it is still struggling to make the toy quickly enough to satisfy demand.
“It’s really hard to be on ‘top toy’ lists and come November, be short everywhere,” Wiseman said. “It’s the perfect storm of everything. … You’re only as good as the weakest link in the chain.”
Artificial Christmas tree
National Tree Co.
National Tree Co. sells hundreds of thousands of artificial trees a year — almost all of them in the weeks before Christmas.
That means it’s crucial that the company get its trees from China into U.S. warehouses by early fall. But with millions of shipping containers tied up at short-staffed ports and warehouses, it’s become tougher and costlier than ever to find containers to transport the bulky, 7.5-foot tall trees across the Pacific Ocean.
“Our #1 priority is to get trees into the country, no matter the cost,” said Chris Butler, the company’s chief executive. “We placed our orders more than a year ago, thinking that would be enough time. But with everything that’s happening, we’re still going to be short about 10 percent.”
The company, which ships as many as 50,000 packages a day in the run-up to Christmas, says its factories in southern China are operating smoothly. But every step after that has become weighed down by backlogs and worker shortages. Cargo containers — which hold about 300 to 500 trees apiece and used to be readily available — can now take several weeks to track down, Butler said. Loading, transporting and unloading times are also longer.
The trees’ journey from Shenzen, China, through the Panama Canal and up to the Port of New York, has gone from three weeks to eight, Butler said. Even once the trees arrive, it often takes more than a week for them to be unloaded off ships and put on a truck to the company’s warehouse in East Windsor, N.J.
Costs have skyrocketed, too, as manufacturers and freight companies struggle to keep up with increased demand. Each pre-lit 7.5-foot Dunhill fir, which sells for about $330 at national retailers like Amazon, Target and Wayfair, now costs $50 to ship across the ocean, he said. That’s compared with $5 a year ago. Other components have also gotten pricier: the cost of PVC plastic for tree needles has risen 65 percent from last year, while steel for the pole structure is up 58 percent.
The company, based in Cranford, N.J., recently raised wholesale prices by 25 percent, but says buyers were initially hesitant to pay the premium. “Quite a few retailers got back to us and said, ‘You’re way higher than your competitors.’ But that’s what we had to do to cover our costs.”
Retailers, he says, did end up paying the higher prices, and in most cases, are passing it on to consumers.
Butler says he expects shipping delays and higher prices to persist, at least for another year. “I don’t see this ending anytime soon,” he said. “We’re already placing orders for next Christmas.”
Delicato Family Wines
The winery owned by famed Hollywood director Francis Ford Coppola was bought in August by Delicato Family Wines, one of the largest domestic wine suppliers. Francis Ford Coppola Winery typically buys grapes from vineyards in Napa, Sonoma, Paso Robles and elsewhere in California — part of their strategy for mitigating risk of fires. In 2020, they were down 25 percent in total grapes picked because of widespread fires, and in 2021 they were 10 percent off normal due to extreme drought and lack of workers to pick.
Still, says winemaker Corey Beck, the pinot noir and grenache grapes that produce the Sofia line of sparkling wines have not seen lower yields, but the winery has seen pain points in nearly every other aspect of the winemaking process due to supply-chain bottlenecks.
Glass bottles from China have increased in price nearly 70 percent in the past year and now need three additional months of lead time. Parent company Delicato buys about 55 million bottles per year, many from O-I, one of the world’s largest glass bottle manufacturers. While there’s not a shortage of glass ingredients (silica sand, soda ash and limestone), increased demand across all industry means wineries are competing with jarred pasta sauce and jam for manufacturing time.
All other components of packaging have increased in price and lead times, according to Julia Smith, vice president of supply chain. Labels have gone from three to four month lead times and increased in price because of labor shortages and skyrocketing prices for paper pulp fed by corrugated cardboard demand, in part due to increased e-commerce. The Italian wire cages that top the corks for sparkling wine have gone from three to five month lead times and increased by 13 percent in price, in part because of surging aluminum prices driven by the auto industry’s increased reliance on the metal to reduce car weights and fuel efficiency, as well as by civil unrest in Guinea — the world’s second-largest producer of aluminum ore. Even the glue to affix the labels has been in short supply because the plants that make it in the Sun Belt region were closed last winter for weeks because of the deep freeze.
Smith says Delicato uses about 175,000 wooden pallets for wine shipments annually and this year is having to swap out recycled pallets for new ones just to keep shipping (recycled pallets were $8 pre-pandemic and are $17 now; new pallets are $35).
All of these lags delay the bottling of the wine, which sits in huge stainless-steel tanks until all of the elements (bottle, cork, label, boxes) are available to run the bottling line. But even after bottling, trucking represents the biggest impediment to bringing the wine swiftly to market.
For wines going from California to most states, delivery times have increased from 7 days to about 16, and in the furthest states, such as Florida, times increased from 30 days to 38. And for the wines Delicato imports, 30-day delivery times are now 90 days to customers.
“We’ve experienced disruptions in every element of our business,” Smith said. “Production now takes 10 months and previously it was 6½ months, primarily due to glass and material lead time and labor availability.”
About this story
Illustrations by Janet Mac. Graphics editing by Kate Rabinowitz. Photo editing by Haley Hamblin. Copy editing by Brandon Standley.