Port Logjam Costs Toymakers Millions With Sales Stranded at Sea

Geoffrey Greenberg never thought the West Coast ports’ traffic jam would get this bad.

Just Play, the toymaker he co-founded, had an order for 400,000 items canceled by a retailer because the goods were a month late, stranded on a cargo ship. Even worse, the products are tied to Easter, so the company won’t be able to sell them until next year. Greenberg declined to identify the customer or toy line but said the snafu may cost his company “millions.”

“It’s out at sea, and we can’t get to it,” Greenberg, a co-president of Deerfield Beach, Florida-based Just Play, said this week during the North American International Toy Fair in New York. “Everyone assumed it would have eased up by now. It hasn’t.”

The continued ports logjam is hitting toymakers just as they enter the second-biggest buying season of the year, when retailers stock up on spring and Easter gifts. The nine-month labor dispute between dockworkers and port operators caused some disruption to the industry in the fourth quarter, and the delays have become even more widespread in recent weeks.

Areaware, a Brooklyn-based maker of high-end wooden blocks and figurines, has a shipment of one of its best-selling items sitting on a ship off California. The goods are a month late, and while the company isn’t worried about cancellations, customers already are skipping replenishment orders, said Rob Felton, Areaware’s vice president of sales and marketing.

‘There’s Nothing’

“As a small company, there’s nothing we can do,” Felton said this week from Toy Fair. Other shipping options like air freight are so expensive that “we’d lose money.”

Larger toymakers can spend more on shipping and have better logistics, so they have been rerouting goods to other ports. Eva Lorenz, category leader for toys and games at Amazon.com Inc., said the company has been shipping toys to the East Coast since the fourth quarter. While the process takes longer, it has prevented products from running out.

The most fortunate toymakers are those that produce their wares domestically. Lego A/S has been largely shielded from the shipping delays because it builds the bulk of its construction sets for North America in Mexico, said Soren Torp Laursen, president of Lego Systems.

“We are fortunate,” Laursen said. “We are almost not impacted.”

American Made

The port delays have become an opportunity for John Gessert. He’s chief executive officer of American Plastic Toys Inc., which makes dollhouses and basketball hoops in the U.S. In early January, the half-century-old company began receiving bigger orders from small and large customers, including Wal-Mart Stores Inc. and Target Corp. The downside of the extra sales is that the Walled Lake, Michigan-based company’s factory is overworked.

“It’s an opportunity, and don’t get me wrong, I don’t mind having the extra business, but it is putting a strain on us,” Gessert said from his company’s booth at Toy Fair.

Gessert also serves as chairman of the Toy Industry Association, the trade group that runs the fair, and said the peers he’s talked to this week have expressed mounting desperation.

“Everyone is worried,” Gessert said. That includes retailers, because “empty shelves are a killer.”