Retailers warn against last minute Christmas shopping amid supply chain chaos

 In Home News Section, Uncategorized

Balloons, books, bikes, hair products, toys, game consoles: Name almost any item imported to Australia and you can bet a retailer is struggling to get it, and it’s costing a fortune to get it here.

Shop owners are caught up in a global supply chain crunch and it’s set to hurt consumers this Christmas.

For Andrew Schwartz, who manages games and comics store Area 52 in Hobart, the gaps on his shelves are growing.

“Manga comics are a big thing, and it’s very difficult to get most things that require plastics, and things that require wood,” he says.

“I would say we’ve got about 40 per cent of our stock missing that we would like.”

Mr Schwartz says the business is already suffering because of border closures, and now he’s worried about having what customers want for Christmas.

“I’ve never quite had it this bad, and customers are getting upset,” he says.

What’s going on?

COVID-19 outbreaks overseas are wreaking havoc on global supply chains.

Most of what lines the shelves of Australian retail stores is imported from China and other Asian countries.

In August, one coronavirus case was enough to shut down a critical part of the world’s third-busiest container port, at Ningbo in China, for a fortnight.

Outbreaks of the virus have also closed down factories and ports in Vietnam, which is known as the growth engine for apparel in the world.

“The majority of our imported goods come from these regions, particularly consumer electronics and textiles,” says Marcus Carmont, executive of TMX Global.

“When these markets start to retract, we start to see huge impacts.”

The closures have resulted in a huge backlog of orders and a shortage of parts like chips for electronic goods.

Retailers and shoppers waiting months for orders

The demand squeeze means Australian consumers and shop owners like Vicki Beasley from Beasley’s Cycles are waiting months for stock.

“Before [COVID-19] when we had a sale, we could just call up [the wholesaler] and order it and we would have it the next day,” she says.

Ms Beasley says the supply of cheaper bikes, like those for children, has dropped by 50 per cent, while wait times for high-end bikes have blown out to between six and 10 months.

“I think November will be my next shipment of road bikes. I’ve got about two or three $7,000 sales sitting there waiting for those bikes to come in. It’s really, really crazy.”

Larger retailers better placed to cope

Almost every major retailer has foreshadowed a difficult year ahead due to global supply chain issues.

Australia is also competing against more lucrative markets for products like the US, where consumer spending is soaring and driving up shipping rates.

Freight rates for the China-US route are about $US25,000 a container compared with between $5,000-$8,000 for shipping to Australia, according to TMX Global.

To avoid stock shortages and strike cheaper shipping deals, many big players have been forced to order larger quantities of merchandise and open new warehouses to carry it.

For example, JB Hifi has ordered an extra $200 million of goods but is still facing shortages of high-end electrical goods from manufacturers like Apple and Microsoft.

Paul Zahra from the Retail Association says those workarounds are not an option for many small businesses who ordered much smaller quantities of stock.

“Small businesses have had a really tough year,” he says.

“They’ve been absolutely decimated by this pandemic. And unfortunately, they’ll be even more impacted by the supply chain issues that they’re currently experiencing.”

Before the pandemic, about 80 per cent of air freight to Australia was carried on passenger flights.

But fewer international arrivals meant air freight was also no longer an option for many retailers.

“It’s [air freight] either impossible to get or too expensive,” said Mr Carmont.

Pressures on Australia Post are another headache for consumers and retailers, with pick-ups from e-commerce retailers in NSW, Victoria and the ACT cancelled until Tuesday.

Around 500 Australia Post staff are in self-isolation as a result of COVID-19 outbreaks, while flight restrictions and temporary facility closures have also put pressure on the network.

What does this mean for your Christmas shopping?

You might have trouble finding the items you want in shops, and may not be able to get it in time for Christmas.

Claire Kurzmann has been waiting four months for a book delivery from London and three weeks for a beauty product bought through an Australian company.

“With all the COVID delays, it certainly is a frustrating experience. It would make me think twice about ordering [online shopping],” she says.

Analyst Marcus Carmont says China’s annual week-long shutdown for Golden Week in October will also add to the supply chain issues.

“If the products are not on the water, it’s not going to be here for Christmas.”

You could also pay more.

“Retailers are paying up to four times the cost shipping products to the country, which ultimately will impact on prices,” Mr Zahra warns.

Area 52 manager Andrew Schwartz says it’s already happening with goods he’s importing.

“For example, the cost of a book has gone from $19.99 to $22.99 to now $24.99 in a year.”

Is there an end in sight?

The global supply chain issues are set to drag on.

“We know that every ship that currently can be in transit is on the water, or they’re actually on the dock currently stocking up,” says Mr Zahra.

“So it’ll take up to till at least 2023 for new ships to be built and to actually decrease the bottleneck that we’re currently experiencing. So it’s quite a significant impact.”

Mr Carmont says Australia’s ability to compete against markets like the US for stock is also limited.

“This is a global issue that we’re seeing play out today against the backdrop of demand into the US, which is really showing no signs of slowing at the moment,” he says.

“Australia is around 0.3 [per cent] of the global population. Our ability to be able to flex our muscles in terms of the global economies is based on our demand.”

Mr Zahra says consumers need to be thinking about Christmas now.

“It really will be the case of the early bird gets the worm.”

By business reporter Rhiana Whitson (Original ABC Article)