The good news is businesses are flush with inventory this holiday. The bad news is you still might not be able to get what you need on time.
To avoid last year’s shortages, retailers ordered early and diversified their suppliers to ensure they had ample inventory for consumers, but even the best laid plans can go awry. A potential rail strike, coupled with trucking and labor shortages, soaring diesel prices and inflation, could, well, send the holiday off the rails again.
“Fortunately, this year’s holiday gifts have already landed on store shelves,” said Jess Dankert, Retail Industry Leaders Association vice president of supply chain. “But an interruption to rail transportation does pose a significant challenge to getting items like perishable food products and e-commerce shipments delivered on time.”
Why is Dec. 9 important?
That’s when rail unions could strike.
Biden’s administration last September brokered terms to avert a strike. Eight of 12 unions have ratified contracts, but the holdouts represent more than half of rail labor.
“And if some rail unions struck, others would be expected to honor their picket lines,” wrote Labor Notes, a media and organizing project for union workers and activists.
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“A U.S. railroad strike would be economically costly, roil supply chains and put upward pressure on U.S. goods inflation, making inflation problems temporarily worse,” said Moody’s Analytics economist Bernard Yaros.
A rail strike could cost the U.S. economy $2 billion a day, some analysts estimate.
Congress can intervene and outlaw a strike, but Dawn Tiura, president of Sourcing Industry Group, a membership organization for supply chain professionals, warns a “work slowdown is definitely a possibility. Consumers might be stuck with this for a while, and (costs) will be passed on.”
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What are companies doing to ease deliveries?
Retailers, especially small businesses, have been prodding consumers to buy early, said Brett Sussman, vice president head of sales and marketing at Kabbage, part of American Express.
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In preparation, 23% of 550 small businesses have invested in new marketing tools, and 64% plan to increase marketing to attract customers, according to the Kabbage survey Sept. 20 to Oct. 3. Most used seasonally targeted emails, holiday product bundles and other holiday promotions and incentives.
“They’re also really trying to set more realistic shipping expectations, like no longer guaranteeing things will arrive by a milestone date, like Christmas Day,” he said.
Meanwhile, delivery companies like UPS already are making contingency plans. “UPS is already rerouting off railways in preparation for a potential strike,” Tiura said. “They’d have to rely more on truckers, but we already have a shortage of truckers. High diesel prices have driven a lot of independent truckers out of business.”
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Should consumers expect shortages?
No major shortages are expected, but some food items may be missing for short periods of time.
About 30% of consumer-packaged goods move by rail, according to the Consumer Brands Association.
“Companies that manufacture and distribute everyday items like peanut butter, cooking oil, breakfast cereal, soap, canned vegetables and household cleaners utilize rail to transport high concentrations of both raw input ingredients and finished products,” said Tom Madrecki, Consumer Brands Association vice president of supply chain and logistics.
Tiura says there could be “rolling shortages of stuff like fruit or chicken,” especially for Northern regions that rely on long-range trucking for perishables. “Personal gifts usually pay more than food. Food has small margins, and the almighty dollar wins.”
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How can consumers avoid supply chain interruptions?
- Buy and ship gifts as early as possible, even before Dec. 9 in case rails go on strike that day. Not only will that help get your gifts where they need to be on time, but it may end up saving you money.
“After Dec. 9, when businesses have to restock their shelves, prices might go up,” Tiura said.
- Buy in person locally, then drop your gifts off.
- Stock up on groceries, especially staples. “Shop earlier,” Tiura said. “If there’s a short supply of something and you’re waiting to get it, get a substitute.”
Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at firstname.lastname@example.org and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.