Shoppers should expect holiday gift shortages, shipping delays

This holiday season, School of Management faculty members say to expect shortages of gift items like toys, clothes and appliances, as well as delays in order fulfilment — all caused by global supply chains disruptions.

“‘Shop early and avoid the Christmas rush’ is consumer advice we hear every year, but it’s even more important this season,” says Nallan Suresh, UB Distinguished Professor in the Department of Operations Management and Strategy.

Mike Wei, assistant professor of operations management and strategy, agrees with Suresh’s supply chain forecast.

“This holiday season will be a roller coaster ride,” says Wei. “Suppliers and manufacturers have been working exceedingly hard to squeeze the last juice out of the supply chain. Yet, given the pervasiveness of the global pandemic, there have been constant interruptions, creating a sense of uncertainty. This has had a ripple effect on the supply-and-demand relationship and further fueled the supply chain mismatch,” he says. 

“What we will see in this coming holiday season are two extremes: Most understocked products will be sold at a premium and run out of stock soon, while other overstocked products will be sold at a loss.”

Given the supply and transportation issues, sales of experiential products like restaurant and spa gift certificates are likely to increase this holiday season, notes Arun Lakshmanan, associate professor and chair of marketing.

He also expects prices to go up due to supply shortages and changes in shopping habits following the pandemic.

Suresh says many of the current supply chain woes in the U.S. are attributable to COVID-19, but can be traced back even further to the trade war period before the pandemic:

• There have been logistics bottlenecks starting with congestion at the ports of entry, especially at West Coast ports like those in Los Angeles and Long Beach, California. This has been coupled with a shortage of truck drivers and limited hours for port workers. Round-the-clock operations at affected ports are currently attempting to relieve the bottlenecks.
• Container availability has also been a major problem, given the demand surge after COVID hit, and shipping costs have skyrocketed.
• There has also been a major disruption in the labor market due to an insufficient workforce to handle production and logistics. New work-from-home modes of work caused by the pandemic and increased expectations of a better work-life balance have led to a shortage of workers, even as countless jobs are waiting to be filled.

Around the world, there have been major production cutbacks in China and Vietnam, Suresh says, In addition, the recent coal shortage crisis in China has caused a power shortage for industrial use, curtailing production volume there. China is also experiencing disruptions in its export hubs and major ports due to COVID-19 and the delta variant. 

“Even as we are busy addressing every bottleneck in current supply chains, the medium- and long-term goals of diversifying our supply sources should not be forgotten,” says Suresh. “Supply chains that are too long and globally extended have numerous sources of vulnerability. Shorter supply chains, with closer-to-home production nodes, must be cultivated to ensure greater resilience.”