New Supply Chain Challenges Ahead; Toy Association Continues to Advocate for Relief

June 7, 2022 | As The Toy Association continues to provide members with critical updates and resources on the ongoing supply chain crisis (including a recent webinar with the Georgia Ports Authority, which can be accessed online), it is alerting members to news on the movement of current shipping legislation and how the reopening of Shanghai’s port and other disruptions could cause new delays to supply chains in the coming months.

As part of efforts to engage lawmakers on the issue, the Association is joining a coalition of fellow consumer product and retail groups in submitting comments to the U.S. House of Representatives in support of the Ocean Shipping Reform Act. The bill, which addresses the enduring systemic issues impacting supply chains and ports, cleared the U.S. Senate in April and is expected to be taken up by the House in the weeks ahead.

“We are continuing to see an unending ripple effect across the global supply chain as our members look to get a jump on any new challenges that may unfold during the critical holiday selling season,” said Ed Desmond, executive vice president of external affairs at The Toy Association. “With the government anticipated to move forward on long-awaited shipping reform in the coming weeks, we are cautiously optimistic that this legislation may help to alleviate some of the ongoing challenges."

One such challenge is Shanghai’s port (the largest container port in the world). Following a city-wide COVID-19 lockdown that’s been underway since March, it is officially moving back to full capacity – and experts suggest businesses and supply chains everywhere brace for impact. Although it has been operating at a reduced capacity throughout the lockdown, the port has severely hindered movement by cancelling, delaying, and diverting shipments to neighboring ports as well as reducing labor and trucking capacity. As factories play catch-up and the port’s backlogs are released, shipping analytics firm Windward has predicted this will cause a “ketchup effect” on the global supply chain; once drained, shippers and manufacturers around the world will feel the messy side effects in terms of waiting times, increasing ocean demand and freight volumes, and potentially container costs. As it currently stands, trucking restrictions continue to limit delivery of cargo to the Port of Shanghai, according to ROC.com.

While Port of Los Angeles Executive Director Gene Seroka noted last month that there had been no dramatic change in the amount of vessels or cargo leaving China in response to the COVID-19 lockdowns, his prediction of a lull followed by a quick bounce back when the lockdowns lift seems to be unfolding now. A surge in goods coming from the China port is expected to begin this month alongside back-to-school goods, fall fashions, and early Christmas shipments, adding to existing bottlenecks at ports from coast to coast.

In addition, contract negotiations continue between the International Longshore Warehouse Union (ILWU) and the Pacific Maritime Association (PMA). While the outcome is expected to be positive, the negotiations are also not expected to meet their July 1 deadline. As a result, cargo continues to be diverted to East Coast ports, such as the Port of Savannah.

According to JOC.com, several shippers and non-vessel-operating common carriers (NVOs) have also reported relying more heavily on domestic intermodal service for faster transport than moving an ocean container. This coupled with manufacturers looking to beat the Q4 supply chain troubles they experienced in 2021, has only moved up the timeline for peak season and put added pressure on other parts of the supply chain like the rail network.

The Toy Association will continue to keep members apprised of developments on this issue, and will host the second in its series of port-focused webinars for members on August 4, which will provide an update from officials at the Port of Houston.

For more updates and access to resources to assist members challenged by supply chain disruptions, visit The Toy Association’s Shipping Crisis Resource Center.