Waiting for Your Ship to Come In? So Is Everyone Else!

Have you ever been at your favorite restaurant and ordered your favorite entrée or dessert, only to be told, "Sorry, we're out of that"?

It's extremely disappointing to be told something you've looked forward to is unavailable. Yes, there are worse problems in the world. But at that exact moment, this one tops the list.

According to economists, we might be hearing, "Sorry we're out of that," often over the next few weeks. Maybe you've already heard it.

The New York Times recently summed it up in a headline reading, "How the World Ran Out of Everything." Bloomberg's headline read in part, "Christmas at Risk."

Huge Rise in Out-of-Stock Items

If you're an online shopper, the message you've probably received is worded slightly differently. It's more like, "The product you're looking for is out of stock."

CNN Business reports out-of-stock products have surged 172% from pre-pandemic levels. Adobe Analytics tracked 1 trillion online visits to a majority of the top 100 U.S. web retailers to arrive at that figure.

Taylor Schreiner is the director of Adobe Digital Insights. He said, "We've never seen it as high as this for the 10 years or so that we've done this report. It's a record."

Echoing his sentiments was Isaac Larian, founder and CEO of MGA Entertainment. "I've been doing this for 43 years and never seen it this bad," he said. "Everything that can go wrong is going wrong at the same time."

Transportation Woes Are Rampant

Adobe Analytics focused on 18 categories. Clothing was the top out-of-stock category. Followed by sporting goods, baby products, electronics and pet supplies.

As we've mentioned before, the chief culprit is not the lack of products but rather supply chain problems. There are still hundreds of thousands of full containers with merchandise stuck on ships that haven't been able to dock at ports.

There just aren't enough dock workers to unload them. And there aren't enough truck drivers to transport them to their destinations once they're unloaded.

As a result, some retailers have warned that fewer discounts and other deals will be offered this holiday season.

Pandemic & Weather Conspire

What caused this dilemma? A variety of factors, but primarily the COVID-19 pandemic. The spread of the virus sidelined port workers and truck drivers.

This has slowed both the loading of goods made in Asia and the unloading and distribution of those goods when they finally reach North America.

The pandemic also did a number on sawmill operations. This caused a lumber shortage that has negatively affected home building.

Going back to last winter, storms in the South, including in the Gulf of Mexico, stymied the delivery of a variety of products.

Another contributing problem is that many companies purposely limited inventory prior to COVID. This "Just in Time" movement, popularized recently by Toyota, caught on worldwide. But it did not anticipate a global pandemic.

It's Getting Late to Shop Early

Many consumers are aware of these issues and are compensating by shopping earlier. According to a Deloitte survey of more than 4,300 consumers, approximately three-fourths of them expressed concern about out-of-stock items.

But now in late November, it's not early anymore. Delivery delays mean apparel chain H&M can't meet demand. Factory closures in Vietnam made Nike cut its sales forecast. Bed, Bath & Beyond's stock plummeted due to shipping problems.

Some retailers are buying products made two years ago. Just so they can have something on shelves for holiday shoppers. Suppliers are receiving more orders than they can fill. But retailers can't fill shelves. All due to transportation issues.

According to the Deloitte survey, about 33% of consumers blame supply chain problems. Approximately 27% blame other factors including weather. Some 21% blame retailers.

'Supply Chain Is a Disaster'

Bloomberg Business reports that at a factory in Shenzhen, China, $8 million worth of finished goods that could fill 140 containers is just sitting there.

Jay Foreman is the CEO of Basic Fun. It's a mid-sized toy company that was on pace for its best year ever. But he can't get enough cargo containers to ship his products.

"We'll blow last year's numbers away," he said. "But the problem is we don't know if we'll get (everything) shipped.

"The supply chain is a disaster, and it's only getting worse."

Consumers Draw the Short Stick

This situation might end up being a case of the rich getting richer and the poor getting poorer.

Companies with deep pockets are chartering ships to deliver their cargo to less congested ports. This lowers their profit margins, but gives them a higher market share. Smaller companies will lose out.

And so will consumers. Fewer choices mean higher prices, while no choices mean fewer holiday gifts. Products having a better chance than others at reaching stores are smaller ones that don't cost as much to ship.

Jon Bass is the CEO of custom furniture company Whom Home. He said, "Consumers lose because their options are limited. It's not a normal time in the business world. There is no stability."

On the plus side, digital sales from November 1 to December 31 are expected to be about $207 billion. That's up 10 percent from 2020.

But will products from those sales arrive in time for the holidays? That's what everyone is wondering.

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