NEW YORK: With three months until Christmas, the Basic Fun toy company has made an unprecedented decision: leave one-third of its iconic Tonka Mighty Dump Trucks destined for US store shelves in China.
Why? Given surging prices of shipping containers and clogs in the supply network, transportation costs to get the yellow bulky toy to US soil is now 40 percent of the retail price, which is roughly $26. That's dramatically up from 7 percent a year ago. And it doesn't even include the cost of getting the product from US ports to retailers.
"We've never left product behind in this way," said Jay Foreman, chief executive officer (CEO) of Basic Fun. "We really had no choice."
Toy companies are racing to get their products to retailers as they grapple with a severe supply network crunch that could mean sparse shelves for the crucial holidays.
They're trying to find containers to ship their goods while searching for alternative ports. Some are flying in some toys instead of shipping by boat to ensure delivery before December 25. And in cases like Basic Fun, they are leaving certain toys behind in China and waiting for costs to come down.
Manufacturers are wrestling with bottlenecks at factories and key ports like Long Beach California — and all points in between. Furthermore, labor shortages in the United States have made it difficult to get stuff unloaded from ships and onto trucks.
But for toy makers that heavily rely on holiday sales, there's a lot at stake for the nearly $33-billion US industry. The fourth-quarter accounts for 70 percent of its annual sales. On average, holiday sales account for 20 percent of the overall retail industry. And 85 percent of the toys are made in China, estimates Steve Pasierb, CEO of The Toy Association.