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  • Writer's pictureStephen Fodor

The Scariest Part of Halloween This Year Is the Supply Chain

Monday Morning Wake Up Call

October 11, 2021

The Scariest Part of Halloween This Year Is the Supply Chain

(WSJ) Shoppers seeking witches, ghosts and severed heads to decorate their homes for Halloween are finding something truly scary this year: empty shelves.

The supply-chain snarls that have shaped much of life in the pandemic are now responsible for shortages of Halloween décor and costumes. Consumers and suppliers alike are getting creative and planning ahead.

Ben Wieber, a 27-year-old professional services consultant in Kalamazoo, Mich., struck out trying to purchase a miniature haunted house in-store to add to his Lemax Spooky Town collection, a line of Halloween-themed animatronic figurines and buildings. He was also broadly disappointed in the amount of Halloween décor available at stores near him.

“I went to Lowe’s, Home Depot, T.J. Maxx, HomeGoods and I’m already seeing Christmas stuff replace the Halloween stuff, which is ridiculous,” Mr. Wieber says. “I’m like, hello? Are we just skipping Halloween this year?”

A Home Depot spokeswoman says that stock on its Halloween items went quickly “as consumers are engaged with decorating again this year.” Lowe’s says the company’s stores have stocked both Halloween and Christmas merchandise earlier than usual this year. T.J. Maxx and HomeGoods declined to comment.

The National Retail Federation predicts that Halloween spending will reach an all-time high this year of $10.1 billion, up from a record $9.1 billion in 2017. Two-thirds of Americans plan to celebrate by handing out candy, decorating their homes, dressing up and more. That’s almost back to pre-pandemic levels, according to NRF data.

For those who haven’t yet bought costumes and decorations, the news may be grim. Of more than 8,000 consumers surveyed in the first week of September, 45% says they planned to shop for Halloween in September or earlier, and another 39% planned to shop during the first two weeks of October, according to NRF.

“[Our selection was] really good between the middle of September and the end of September. Once October hit it was just gone, gone, gone,” says Kam Featherstone, an employee at Spirit Halloween in Layton, Utah.

A Spirit Halloween spokesperson confirms that the company has “experienced a few scares this Halloween season” with product delays and increased shipping costs.

Home Depot sold out of prerelease Halloween products almost immediately this year, Ted Decker, the retailer’s president and chief operating officer, said in a mid-August earnings call.

On the Instagram page for arts-and-crafts chain Michaels, an Oct. 1 photo of pumpkins piled high beside someone holding a coffin-shaped sign garnered comments from fed-up customers. “I’ve been to every store in my area and there’s barely anything on your shelves for halloween,” one wrote. In a response to the customer, the Michaels account noted that “we had some shipping delays this year” and the company was waiting on more inventory.

Trick or Treat Studios in Santa Cruz, Calif., designs and supplies Halloween masks and costumes for Target, Walmart and Spirit Halloween. It began ordering products in February, several months earlier than normal, says Mark Lippert, who manages the company’s global supply chain. He says retailers have been generally understanding of the delays and have waived late fees.

Franco Pacini, co-owner of costume mask company Zagone Studios in Melrose Park, Ill., says the skyrocketing price of freight shipping and rising prices on items like foam are stretching the business financially. The company has met demand by ordering early and working seven days a week, he says. It’s already placed orders for next Halloween.

Some retailers are splurging on airfreight to avoid the backlog of container ships at U.S. ports, says Katherine Cullen, NRF’s senior director of industry and consumer insights. Other, smaller shops are buying up vintage or used masks, costumes and other paraphernalia from local collectors. They’re also buying old inventory for stores that went out of business during the pandemic, according to Ed Avis, executive director of the National Costumers Association.

Amy Cobaugh, 49, an avid Halloween decorator in North Canton, Ohio, got creative when she couldn’t find any fake spider webs to decorate her yard. She instead bought 10 pounds of elastic netting used to wrap meat.

She bought her first Halloween item in July this year: a miniature haunted house that lights up and emits spooky piano chords, thunder and ghoulish howls. She wondered if it was silly to buy Halloween décor so early.

“I think because of that pandemic I wanted my spirits lifted a little bit,” Ms. Cobaugh says. “I’m glad I did, because when I went back in August, it was sold out.”

In Michigan, Mr. Wieber continues assembling his “creepy demon” Halloween costume one component at a time.

“I went to one website to find a mask, went to a different website to find big latex hands to go along with the mask,” he says. “I will have to find a large black cloak to tie it all together.”

To Read More:

How did we get here? Why supply chains are so wrecked

(FreightWaves) Transportation costs have skyrocketed across all modes over the past year and a half, leaving many who operate largely outside of the space baffled as to why the situation has not improved. To understand why supply chains are still broken, you need to understand what broke them.

Looking across the four main modes of transportation’s spot rates for ship, air, truck and train, their charts look like an echocardiogram of four people that got hit with a defibrillator after being in a coma.

Obviously, the pandemic is at the root of the cause, but COVID-19 was really just an accelerant that was placed on a smoldering ember. In other words, supply chains were headed in this direction, to some extent, regardless of the pandemic.

Bracing for recession

Looking back into 2019, spot rates were basically flatlining as the freight market was experiencing a cycle of oversupply and stagnant demand. A robust 2017-18 thanks to an overstimulated economy spurred rapid investment and growth only to be followed by a hangover event, which led to the beginning of economic contraction. Many feared a recession was imminent.

A sluggish industrial sector in which industrial production growth was negative for nearly a year indicated stagnant business and infrastructure investment, a sign that the economy was entering a phase of risk aversion and consolidation.

Once the initial wave of the pandemic hit the U.S. in March, many companies prepared for the worst by canceling orders and furloughing employees, entering survival mode as they expected economic devastation.

The government was able to quickly pass a stimulus package that spurred consumer demand to new heights. After a depressing April, consumers took the reins of the economic recovery by using the stimulus money and savings from not driving to work, buying new clothes and dining out to remodel their houses and purchase electronics. This was a shift in a large portion of the population’s lifestyle from a 9-to-5 commute to a remote work one, and the durable goods economy flourished.

The onslaught of unexpected demand in late spring caught most shippers and transportation providers off guard as they were expecting the next depression. They quickly found their once overstocked inventories depleted and needed to order more goods — all at once.

Panic hoarding

What most people do not know is that it takes months to build inventory levels to where companies like Amazon can offer two-day delivery on loofah sponges. With the pandemic interrupting production and shipping operations, shippers began to order not just for replenishment but for the future to avoid missing revenue.

Most consumer durable goods like electronics and furniture have origins overseas, largely Asia. Most of the population lives in the eastern half of the U.S. In order to get goods from China to New York City, it takes several weeks from the initial order date. So in order to prevent inventory shortfalls, shippers need to order months in advance.

As production and subsequently transportation capacity became strained, shippers learned to increase their order sizes. Port infrastructure does not increase in size overnight and transportation providers were reducing capacity prior to the pandemic, meaning demand quickly outstripped supply on multiple levels.

The violent swings in demand can be seen on the Ocean TEUs Volume Index (IOTI) that represents the container demand headed into the U.S. and the Outbound Tender Volume Index (OTVI) that measures truckload tenders from shippers requesting capacity. Both illustrate just how much transportation demand has grown over the past two years.

Supply side/infrastructure growth is slow

The supply side infrastructure is much slower to grow in response, limited by physical production and ironically supply chain constraints itself. An example of this would be Class 8 truck orders not being able to be completed due to limited availability of semiconductors and the subsequent transportation thereof. This expands upon the six to nine months to complete in general.

Expanding ports is a multiyear process and the focus on technological improvement around them is years behind due to the fact that it has never really been an issue until now. So the big question is how long will this cycle last?

The reality is that demand side easing will more than likely be the reason supply chains begin to unkink. Long-term improvements take years to implement and require decent investment. Look no further than road construction to see this in action. Any expansion project takes years from approval to completion.

To put it another way, look to the place where it all started in consumer behavior for the first sign of relief. Shippers will follow suit with industry not far behind.

To Read More:

Holiday shopping in October: Why supply chain experts say you need to shop now, not later

(CBSnews) Every year, Black Friday marks the kickoff to the holiday shopping season. But if you want a happy and present-filled Christmas or Hannukah holiday in 2021, you'll want to start shopping now, in October.

A number of factors are coming together to complicate gift giving this year, especially for those prone to procrastination. Clogged ports, a stressed trucking industry, labor shortages, higher demand and higher shipping costs are all impacting shipments of toys, electronics, apparel and more. The supply chain issues are not only impacting imports from China, where many of this year's hottest toys are made, but also shipments within the United States.

"Major retailers are expecting a strong holiday shopping season, but have warned of limited inventories, longer shipping times, labor shortages and fewer discounts," Morgan Stanley economists recently told investors.

U.S. ports are struggling to keep up with imports

One major pain point in the supply chain is the backlog at U.S. ports. Late last month, CBS News reported that the Port of Los Angeles, which handles 40% of U.S. imports, is facing a record backlog.

"The American consumer's buying strength is so strong and epic that we can't absorb all this cargo into the domestic supply chain," says Gene Seroka, director of the Port of Los Angeles.

East Coast ports are seeing record volume as well. The Port Authority of New York and New Jersey recently reported that it moved more cargo in August 2021 than in any other August on record.

There are plenty of domestic shipping delays, too

Of course, unloading cargo from ships is just the first step in getting this year's hottest toys, apparel and more from Asia to store shelves. Shipments need to be put on trucks, as well. And there just aren't enough trucks to get everything where it needs to go without big delays.

"There are really on average about 16 available truckload shipments for every available truck to move product out of (ports)," Bob Biesterfeld, the CEO of shipping logistics company C.H. Robinson, told CBS News.

Scott Price, the international president of shipping giant UPS, says he is half-jokingly warning people to "order your Christmas presents now, because otherwise on Christmas day, there may just be a picture of something that's not coming until February or March." And the United States Postal Service is bracing for increased holiday shipping volumes by raising rates and slowing the delivery of first class mail, effective October 1. (Send those holiday cards early this year, too!)

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