2021 - 2022 Shipment Delays and Surcharges
In 2021 we received notices from all (except one) of our suppliers concerning permanent and temporary increases to our costs. The last supplier notified us in January of increases for 2022 and most continue to have surcharges for 2022 as the issue continue.
Results: As we receive new merchandise, we will be adjusting our prices before updating our inventory according to our final costs. Also once a product is out of stock (we will receive inititial shipments from most by late October 2022) we may not be able to re-stock before Christmas 2022.
We will limit increasing prices for our customers as much as possible.
Summary of reasons: Shortage of metal freight containers (used on freightliners and trains), ocean freightliners, truck drivers, product supplies, port/dock/yard workers, plus increases in wages, bonuses to attract truck drivers, and tariffs have all combined to cause both supply shortages and price increases.
Below are brief overviews of related issues and then more detailed overviews for those who are inclined.
2020 - 2021 (also 2022) Delays - a shortage of ocean freightliners, truck drivers and metal freight containers (used to transport on ships and trains) has led to a major transit delays. This shortage started mid-2020 and has been increasing every month.
Recently we had a shipment take 3 weeks to transport 90 miles from Phoenix, AZ to our location in Prescott Valley, AZ due to a lack of drivers. Some suppliers have product sitting for weeks off the coast waiting for the ship to be allowed to dock.
2020 - 2021 Delays - port/dock workers - The U.S. (and most countries) has been experiencing a major shortage of dock workers leading to ships sitting at sea waiting for their turn to doc and get unloaded. This is also increasing the shortage of ships available to load. In some cases this is due to major outbreaks in 2020 with high long term illness or fatality rate at ports causing long-term employee shortages.
2021 Price increases - Ocean Freight - Freight charges have been skyrocketing since late 2019/early 2020 and covid-19 has been increasing the charges due to bidding wars for the limited ocean freight and truck spaces available. Recently one of the largest ports in China shut down again due to a covid-19 outbreak. Many of our suppliers (U.S. companies) are resorting to very expensive air-freight in order to receive merchandise by Christmas. Old World Christmas had to ship via air-freight in November 2020 and, as others, may have to do the same in 2021. To cover these costs, they are temporarily charging retailers (as us) surcharges of as much as 25% on top of our invoices. Many have increased the percent of the surcharge multiple times as the bidding wars continue.
2021 Price Increases - Domestic Freight - There is a major shortage of truck drivers leading trucking companies to offer large bonuses. Those costs are also passed onto the companies receiving the merchandise. (Note: There is a shortage of both fuel container trailers and hazard materials drivers, which is partially responsible for fuel price increases, which also affect what shipping companies charge to deliver products to stores).
2021 Price Increase - Supplies/Product Shortage - Many parts are in short supply due to manufacturing shut-downs world-wide in 2020 thru early 2021. Some products will not be available until 2022 due to these shortages while others may lead to an increase in product costs due to bidding wars over those pieces.
2021 - 2021 Price Increases - Tariffs - The Christmas ornaments industry was lucky as the tariffs expected to take place in Sept and again in December 2020 for the Christmas ornaments never took place however items such as our fluffy owl decorations are not Christmas specific, so they were subject to increased 15% tariffs (taxes) which are paid by the U.S. companies to the U.S. government. Also, while the finished product is not subject to the tariffs, many U.S. manufacturers had to pay tariffs on parts and/or packaging to create the finished products. While many of our suppliers absorbed the tariff costs where applicable, many split the costs with retailers by increasing prices by 7.5% to help cover the 15% cost increase.
2020 - 2021 Covid-19 illness - delays - Since the early Fall of 2020 shipping related locations have shut down world-wide for days or even weeks. That is anywhere from USPS, Fedex, UPS individual local locations to major distribution points to shipping docks partially or fulling shutting down due to widespread illness leaving them short-handed. Our local USPS had office workers doing their best to deliver mail during multiple time periods in 2020 when they were short-handed. Many locations have already started seeing that in the past few weeks.
More specific details
Ocean-Freight Surcharge reasons:
Containers Shortage: Ocean freight is placed in metal containers (those big metal containers you see on railroad trains). With global growth every year the # of containers needed increased. Since late 2019 there has been a shortage of containers due to new containers not being made fast enough to keep up with the importing demands and as a result each month the cost to "reserve" one has increased due to supply & demand. The shortage increased due to covid-19. It was hoped the container issue would resolve by late 2020 however that did not take place and the shortage continues.
Increase in imports: In 2019 and 2020 US Imports from China increased significantly leading to more containers needed to keep up with demand.
New containers not made: By 2019 container manufacturing companies were already not keeping up with demand. Due to covid-19 new containers were not being made. (Most containers are made in China).
Empty Containers: Not only were new containers not being made, empty containers were not returned to China. Once restrictions around the world were lifting ships were hauling empty containers and to re-coup that cost of hauling empty containers they had to charge more to "rent" the containers to offset their costs.
Dock Workers: By Aug 2020 we were receiving reports of delays of as much as 4 - 6 weeks due to a shortage of dock workers (due to covid-19). Ships were sitting off the U.S. coast waiting their turn to be unloaded. Unfortunately, covid-19 seriously impacted dock workers who were essential workers and they often worked despite widespread outbreaks versus shutting down the docs. As a results there is still a shortage of workers and that is expected to be a long term expected to last into 2022 and beyond.
All of the above combined means the price wars/bidding to reserve a container skyrocketed, similar to our shortage of houses on the market in the U.S. The sooner a company needs their goods the more they need to pay to reserve an available container. Many are reporting paying 600 times more than in 2019 for a single container.
Search for Google or your favorite search engine for "shortage of shipping containers" for more information and any updates
U.S. (Domestic) freight:
During 2020 a historic number of truck drivers retired (due to covid-19 and as over the past 2-3 years a huge increase in baby boomers retiring) plus due to covid-19 and a lack of interest, there was a historic decrease in new truck drivers being trained. (The average age of a truck driver is late 50's). As a result U.S. trucking companies are paying large bonuses to attack new drivers and hopefully encourage experienced drivers to come out of retirement. This issue is increased for fuel truck drivers.
The result of those costs is freight companies are not only charging more to deliver goods but trailers are sitting waiting for drivers.. Search Google or other search engines for "shortage of truck drivers" for more information.
So far there has been no changes to tariffs during 2021 (no new tariffs and no reduction/reversing of 2019-2020 increased tariffs). U.S. companies pay tariffs (taxes) to our government on all products they import as part of a import penalty. That increases their costs. The tariff on home decor items from China increased from 10% to 25% in early 2019. Many companies delayed increasing their prices hoping it would revert to 10%. Since that has not yet occurred U.S. importers are increasing their prices to cover most of that 15% increase.
While most of our products are Christmas specific, and the planned September 2020 delayed until December 2020 tariff increase for that category did not go into effect, some of our products are categorized tax wise as home decor or electronics. They were subject to the increased tariffs.
Thankfully for our store, only items as fluffy owl figures which are considered year-round "decor" are affected. Our suppliers have increased our prices anywhere from 5% to 15% to cover the increased costs of the tariffs.
Search for "U.S. tariffs on China goods" for more info and updates
Most companies reported that they hoped all of the above would be resolved by late 2020 however that has not been the case for many reasons. The shortages of containers and truck drivers continue and tariffs continue. As of today (8/25/21) all of our suppliers, except one, have notified us they will continue to charge a temporary "surcharge" ranging from 3% to 25% on top of the product cost. That may increase as some may have no choice but use air-freight versus ocean freight due to difficulties reserving containers.
We will do our best to minimize price increases on our website, however increases will be taking place on new arrivals and are subject to change as we receive our final invoices.