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Christmas in January (Lance Turner Editor’s Note)

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It’s a tradition unlike any other, as Jim Nantz might say. The holiday shopping season. That time of year when retailers get back in black amid frenzied, year-end consumption.

But things will be dicey this time, for the reasons you know by heart: the labor shortage and supply-chain bottlenecks. Surveying the major shipping ports, railroad terminals, warehouses, distribution centers and store shelves, American businesses in 2021 are threatened by what they feared last year — to be all out of stuff with no end in sight.

As you read this, dozens of container ships continue to bob off the California coast, waiting to offload tens of thousands of tons of products, a problem that’s lingered since the summer. That prompted the White House to announce a deal on Oct. 13 to get at least one major port of entry — the Port of Los Angeles — operating 24 hours a day, seven days a week.

Whether the port has the workers to staff a 24/7 operation is another question. The lack of workers has dogged most employers since the COVID-19 pandemic forced closures last year, and it exacerbated other labor shortfalls. For example, the dearth of truck drivers has been a recurring, pre-existing condition of the national supply chain since at least 2005. Now ports and warehouses are sharing the pain, contributing to a backlog of goods on the dock and on board impatient vessels queuing in the bay.

As Clark Griswold might say, this is a full-blown, four-alarm holiday emergency. And companies are working overtime to save the season.

Retail rivals Amazon.com Inc. of Seattle and Walmart Inc. of Bentonville have been locked in an intense e-commerce battle for years. But the pandemic lent new urgency to both companies’ efforts to create a supreme high-tech distribution and delivery network that can get goods to consumers quickly and efficiently, at physical stores or customers’ homes.

Both companies are now looking to hire tens of thousands of workers to staff those efforts. Amazon announced in September plans to hire 55,000 people to fill technology, warehouse and corporate positions globally, 40,000 of those in the U.S. That same month, Walmart said it aimed to onboard 20,000 supply-chain workers, including order fillers, freight handlers, lift drivers, technicians and managers at more than 250 Walmart and Sam’s Club distribution centers and transportation offices across the country.

A few weeks later, Joe Metzger, the executive vice president overseeing Walmart’s U.S. supply chain, announced how the retailer would deal specifically with delays ahead of the holiday season.

The topline strategy: Lean on suppliers to source holiday merchandise earlier than usual, then find ways to get product into Walmart’s supply chain “as quickly as possible.” That includes Walmart chartering its own ships to carry goods and diverting shipments through less congested ports. It also managed to hire 3,000 truck drivers. And it’s expanding storage and delivery capabilities and investing in automation across its fulfillment and distribution facilities.

Walmart also joined in the White House effort at the ports. Along with FedEx, UPS, Target, Samsung and The Home Depot, it pledged to unload boats during off-peak hours.

But the prospects for a hectic holiday shipping season remain high. Another key player in the country’s supply chain, J.B. Hunt Transport Services Inc. of Lowell, reported street-beating third-quarter results two weeks ago, with revenue-per-truck and revenue-per-load metrics up across the company. But dire assessments of a beleaguered supply chain surfaced quickly during the company’s Oct. 15 conference call with analysts.

Chief Commercial Officer Shelley Simpson said West Coast bottlenecks will intensify in the coming weeks, pushing peak holiday shipping capacity into November and December. (It’s typically mid-August through mid-October.)

What will that mean? Continued cost increases throughout the chain are a given, but Simpson said she hopes those costs aren’t permanent, merely a byproduct of current conditions. She also expects sparse store shelves, pushing product replenishments into the first and even second quarters of next year. That could make for a stronger-than-usual first half of the year for logistics companies like J.B. Hunt.

But retailers will have to adjust. With products slow to hit shelves, Simpson expects a lot of gift cards will be exchanged this year, which means “more shopping and more retail sales in January.” Everything will be delayed and spread out; a holiday shopping season unlike any other.

Lance Turner is the editor of Arkansas Business.
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