sportstyle

52 • January/February 2022 sportstyle • sportstylemag.com A slow boat to China used to conjure images of the longest trip imaginable, but these days the idiom can be reversed, referring to extensive delays of container ships that are traveling from Asia to U.S. ports, arriving only to sit at anchor sometimes for weeks waiting to be unloaded. It is a problem with a severe impact on the sport- ing goods industry — from raw material sources to manufacturers, from sporting goods dealers to their customers. And no one has an easy answer to a chal- lenge that is going to exist well into 2022. In fact, Insider.com recently reported that U.S. ports moved more than 950,000 containers in August — yet as of early October nearly 500,000 were waiting to be unloaded. e largest cargo ships today can haul 24,000 containers — equal to a freight train 44 miles long. Marine Traffic, a ship tracking website, counted more than 50 container ships outside Long Beach and Los Angeles on October 13 — those two ports handle the bulk of cargo coming from China. On the Eastern coastline, there have also been queues of ships outside Savannah Port in Georgia. You can do the math. Although port congestion is far from the only factor contributing to supply chain woes, it's one of the most visible. e story is familiar to most by now: • Basically, pandemic lockdowns caused goods to get stuck in some places and overloaded in others. • Once things opened up there was a surge in demand. • is was all exacerbated by labor shortages and extreme weather events (such as extensive flooding in China that caused blackouts and factory shutdowns). • Port congestion plus a lack of warehouse workers and truck drivers are adding to the logistical nightmare. The bottom line: snarled global supply lines of everything, including sporting goods. More Headaches on the Way On the supply side the headaches continue to multi- ply. For example, a recent surge in COVID-19 cases in Southeast Asia – notably Vietnam and Malaysia, a key production hub for athletic shoes and apparel – has throttled ports and locked down plantations and pro- cessers, sparking extended disruptions of raw materials. Many experts believe the pain will continue well into the second half of 2022 and perhaps into 2023. As Bloomberg.com recently stated, "e system underpin- ning globalization – production on one side of the planet, connected to consumers on the other by trucks, ships, planes, cranes and forklis – is too rigid to absorb today's rolling tremors from COVID-19, or to recover quickly from the jolts to consumer demand or the labor force." According to Wall Street research firm BTIG, Nike produced an estimated 350 million pairs of sneakers in Vietnam in 2020 and as many as 160 million pairs may not be made this year because of the shutdowns. In fact, products that normally take about three months to pro- duce in parts of Asia are now taking 12 weeks longer due to backlogs. A few months earlier, COVID-19 outbreaks made India a trouble spot. Looking ahead, industry experts believe the picture will grow bleaker as the holidays near. A shortage of raw materials and rising energy costs are impeding already overstressed production capabil- ities and schedules and longer transit times and soaring transportation costs are testing everyone's patience, finances and ingenuity. For example, two years ago, a 40-foot container cost less than $2000 to transport goods from Asia to the U.S. Today, the service fetches as much as $25,000 if an importer pays a premium for on-time delivery, which is a luxury. So, how does all of this impact the sporting goods market? Manufacturers Struggle To Adjust To Disruption "e supply chain disruption has affected everyone," says Zachary Meller, EVP and chief strategy officer at Champion Sports. "During the pandemic, we saw a huge e-commerce boost for fitness products as school, team and institutional sales fell off. When schools reopened, we received a flood of orders so we had to place a lot of reactive orders — about 10 times the amount of orders we typically used to place." roughout the supply chain crisis, "Our prime focus has been to obtain product or stock by any means neces- sary to service our customer base," explains Meller. "We hope this reliability will have a long-term halo effect — having product in our warehouse that's available to our customers in a time of need where product isn't readily procurable will lead to the strengthening of existing and new relationships in the future." On top of everything else going on, Meller is concerned about China's power grid. "Different provinces have different power supply lim- itations, and power to factories has dwindled to three to four days a week – five days max – and the cost of power in China has increased significantly. is also impacts the supply chain," he notes. "We're now looking at more significant price increases going forward," he adds, pointing out that last year there were shortages of steel, rubber and wood and now plastic, PVC and related materials are in shorter supply and are BROKEN CHAIN e team sports market continues to grapple with a fractured supply chain. By Judy Leand SPECIAL REPORT/SUPPLY CHAIN

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