No Ports In (Retail) Storm Of Logistics Delays

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There’s the buying and the buying — but it’s getting the goods to the buyers that is a problem.

As Bloomberg reported Friday (Feb. 26), retailers across a number of verticals have been struggling with logistics — namely, getting goods from point A to point B, even as consumers continue to spend.

And, in particular, inventories may be disrupted, reported the newswire, which means, eventually down the line … prices may rise as demand keeps up, but inventories dwindle.

In one example, as quoted from a recent earnings call, Crocs CEO Andrew Rees said on an earnings call this week that getting deliveries “through Long Beach and other ports, getting shipped to customers is really challenging right now. And that’s not an issue with production capacity; that’s just logistics.” Anecdotally, other firms have seen similar issues, ranging from shoemakers such as Wolverine Worldwide on to equipment makers such as Bowflex. The end result is that sales get deferred into subsequent periods.

We note that the Crocs commentary is telling. California may serve as a bellwether of sorts for logjams and logistics challenges, which have the ripple effect of slowing down the last miles of commerce. In some cases, getting the containers reserved to ship has been an issue or ships idled due to delivery delays amid a surge of imports at the Los Angeles port. In other cases, cargo has been lost, gone overboard to the briny depths (seas can be rough).

Hurry Up And Wait  

The Commercial Observer reported this week that container ships at the Port of Los Angeles and the Port of Long Beach have seen bottlenecks even into January, where shipments were up year over year by more than 20 percent.

“A  record number of more than 60 container ships are now parked offshore as of [late February],” reported the Observer, which means that other shipments have had to be diverted.

If retailers have to wait weeks to get inventory in hand, then that of course leads to stockouts. Stockouts lead ultimately to consumer dissatisfaction, which means that consumers may, when shopping online, decide to abandon purchases until they go online and see the delivery windows they like.

The satisfaction of making a purchase, especially one that is of the “click and pay” variety, comes in part with knowing that what’s on order will come — and in the age of Amazon, come within a day or two.

There’s no real indication that making things, well, here, can solve the pain points the shipping industry is seeing.  As reported last week, in the U.S., consumer spending on durable good items was up 6.4 percent, but the domestic production of those same goods was down 8.4 percent.

And the urge to splurge, as we might call it, continues unabated. As PYMNTS reported this week, the Commerce Department report showed a 2.4 percent rise in consumer spending for January, with outlays for goods far exceeding services. Demand, and spending, grew for durable goods (led by recreational goods and vehicles, notably information processing equipment) and nondurable goods (led by food and beverages), according to the Commerce Department data.

Read More On Retail:

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NEW PYMNTS DATA: HOLIDAY SHOPPING RETROSPECTIVE STUDY – FEBRUARY 2021

About The Study: The Holiday Shopping Retrospective Study: Merchant Insights For 2021 And Beyond, a PYMNTS and PayPal collaboration, examines consumers’ shopping practices and preferences during the 2020 holiday season and what these mean for merchants now and for holiday seasons to come. The report is based on a census-balanced survey of 2,070 U.S. consumers.

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