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Cargo delays put pressure on retailers as holidays near - Up Front - Aah's Card and Gift Stores, Los Angeles - Brief Article


For 17 years, Jack Singh has been in the card and gift business, with seven stores dotted across the Los Angeles area.

But he's never been so worried as he is about this holiday season.

With nearly 40 container ships stacked up last week beyond the breakwater of the ports of Los Angeles and Long Beach, goods are taking as long as two to three weeks to make it to dry land once they arrive in Southern Californian waters.

With such a long waiting period, some ships are dropping off their goods elsewhere on the West Coast--in Ensenada, Baja Calif., Seattle, Tacoma, Wash. and Oakland. Each has more vacant berths and less traffic than the L.A. ports. Goods are then trucked from the ports to Los Angeles, adding time and money to the equation.

"It is a very scary holiday season," said Singh, vice president of Los Angeles-based Aah's Card & Gift Stores, with locations in Westwood, Torrance and Sherman Oaks. To make sure his knickknacks arrive on time from China, Singh, like other small retailers, has resorted to air freight--at a cost five times higher than normal shipping costs.


"We are air freighting in the items we think will be hot gifts," he said. "In the end, the consumer will pay for it in increased costs of as much as 50 percent."

Retailers scramble

Other retailers are also scrambling to make what is already anticipated to be a weak holiday season work out, without letting the slowdown at the ports ruin their balance sheets.

Some will cough up more money to air freight goods in. Others will be looking for substitute items or run the risk of seeing their shelves empty out as Dec. 25 approaches.

At City of Industry-based Hot Topic Inc., a chain of 400 youth-oriented stores located in malls, most of the holiday goods have arrived, except for a slim 5 percent that are still stuck somewhere.

"We have some shoes that haven't arrived and some plush toys like SpongeBob (Squarepants) that aren't here yet," said Jay A. Johnson, senior vice president of strategic analysis and investor relations.

"While it may be a little stressful for our buyers who are waiting for these things, we have things in inventory we can substitute, such as our plush Invaders M or other SpongeBob items, such as SpongeBob tube socks or inflatable SpongeBob," he said.

A 10-day lockout of dockworkers on West Coast ports ended on Oct. 9, when a judge ordered the Pacific Maritime Association, which represents shipping lines and terminal operators, to reopen the ports for 80 days. But with tensions between the PMA and the International Longshore and Warehouse Union still high, the area's ports are still a mess.

Last week, the union denied that it has been orchestrating slowdowns at West Coast ports, as alleged by the PMA. Meanwhile, both sides continue to talk separately with a federal mediator. There is no date for any resumption in negotiations.

"It is going to take weeks and months to sort this out," said Capt. Manny Aschemeyer, executive director of the Maritime Exchange, a non-profit organization that tracks vessel traffic for the two local ports. "We have a logistics nightmare right now involving trucks, trains and storage yards."

Those aren't encouraging words for those retailers who didn't make some kind of arrangement to get their goods shipped early this summer.

Slow arrivals

At Skechers U.S.A. Inc., the Manhattan Beach-based shoe company with nearly 40 of its own retail stores, things have been arriving slowly--and expensively.

"We've had some delays. It appears we will be okay for the holiday season," said David Weinberg, the company's chief financial officer. "But the shipping companies are increasing their fees between 10 to 25 percent. It will put some pressure on pricing."

Toy importers and retailers are in the most vulnerable position because many of their goods come from China. While big retailers like Toys 'R' Us Inc., FAO Schwarz and Wal-Mart Stores Inc. made arrangements to bring toys and games in early, small toy stores will be paying dearly at the last-minute to air freight goods to L.A.

"With the uncertainty of getting goods on time, I see the last-minute replenishment of popular items on toy shelves as a problem;' said Charlie Woo, chief executive of Megatoys, a Los Angeles toy importer.

Woo notes that with the two-week delay in getting goods off ships, he won't be placing any last-minute orders in early December.

The hottest toys are likely to be priced at a premium because they will have to be brought in by air freight to make it in time for Christmas.

"Normally I would have placed more orders and pushed the envelope more on ordering goods;' said Woo. "Now I have orders scheduled to arrive until the end of November, which means I'll be importing about 15 percent less for the holiday season."

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