Credit: NeONBRAND on Unsplash
The Wall Street Journal recently highlighted the latest economic casualties with an extremely on-brand headline— “the scariest part of Halloween this year is the supply chain.” Logistics, BOO! Granted, empty shelves at Spirit Halloween may more inconvenience than crisis, but this story highlights how supply chain issues are starting to impact not just manufacturers like us, but consumers throughout the economy.
We can trace the life cycle of a generic Halloween decoration to see what’s going on, for example, those little ghosts people put up that light up and make noises when someone walks by. The vast majority of those are manufactured overseas, typically in Asia. They require parts manufactured overseas as well… motion sensors, speakers, LEDs, semiconductors. There’s your first problem. Everyone by now knows about the semiconductor shortage—the handful of plants that produce the global supply have been variously shut down during COVID and are struggling to meet demand. Let’s assume our Halloween decoration manufacturer sources the parts and completes assembly between local COVID outbreaks. Great. Time to ship it to the US since they don’t celebrate Halloween where it was made. There’s your second problem.
The cost to ship a container from Asia to North America is somewhere around $25,000, up from a pre-pandemic cost of $2,500. Let’s hope that ghost sells at a high enough price to leave some profit margin. Let’s assume it does and makes it onto a ship and across the ocean. There it must wait in line. A surge in demand has created a bottleneck at the ports of LA and Long Beach—so much so that this week the Biden Administration announced a deal to keep the port open 24/7 for the foreseeable future. Once offloaded, hopefully before Halloween, it has to get to the local Spirit Halloween. We need a truck driver. Those are in short supply too, as are new trucks and parts need to keep existing trucks running.
If by some miracle our ghost makes it to the shelf at a retail outlet, basic supply and demand would dictate that it’s going to cost more than it did a few years ago, regardless of all of the new input costs. After all, it’s the only ghost in a town full of new homeowners who need to start their Halloween decorations somewhere.
Manufacturers like us have been dealing with this for some time. It’s hard to get raw materials, and if you’re lucky enough to get them, they don’t come cheap. And it seems to be getting worse, with energy prices skyrocketing to the verge of a full-blown crisis. The only near-term solution seems to be to plan ahead for things to be in short supply and be patient when awaiting their arrival. Two virtues forgotten during the ‘just-in-time’ economy that we’re all painfully relearning.
Have a weird or interesting story about how supply shortages are impacting your business? We want to hear it! Email us at hi@harbinersign.com or hit reply and we'll feature it in a future edition.
Credit: NYTimes
The Times has a revealing look at what life is like at the Port of Savannah amidst the Everything Shortage.
