The Disruption Report #2: Chip Shortages and Containers Overboard

This article is the second in our new series, “The Disruption Report.” The number of challenges facing the toy industry has become so numerous and complex that we are regularly reporting on the industry’s disruptions.

Chip Shortages

There is a severe chip shortage that has negatively impacted automobile manufacturing. It is now having an impact on the production of video game consoles and toys. Here is how a Bloomberg article, “Chip Shortage Spirals Beyond Cars to Phones and Consoles,” puts it:

Apple, a major Qualcomm customer, said recently that sales of some new high-end iPhones were hemmed in by a shortage of components… And Sony Corp. said Wednesday it might be unable to fully sate demand for its new gaming console in 2021 because of production bottlenecks.

According to the article, the cost of chips has subsequently risen 15% over the last six months.

Supply Chain

As we have previously written, the supply chain is a mess, with disruption occurring at every point. One area of concern is the delays between when a container ship drops its cargo and an inland freight carrier picks it up. There is a call for domestic freight carriers and container ship companies to stop working in silos and begin working together to clear freight out of the ports. That’s according to Bloomberg in its article, U.S. Maritime Regulator Urges Freight ‘Silos’ to Unite in Crisis.”

Also, fears of Coronavirus infecting dock workers and further disrupting activities in the Port of Los Angeles may prompt officials to move port workers up in line with those eligible to receive the vaccine. I found that in a Bloomberg article entitled: “U.S. Dockworkers May Get Better Vaccine Access, Easing Port Risk.”

Containers Overboard

I spoke with someone last week who was unable to get ink for his printer. The reason, the containers carrying HP ink fell overboard. It appears that problem has occurred several times recently. Here is how the Wall Street Journal put it in its article, ” How Shipping Containers End Up in the Ocean.”

Hundreds of containers have fallen from container ships into ocean waters in recent months, in a flare-up of accidents that can destroy millions of dollars worth of goods, damage vessels and endanger lives and the environment.

The problem arises because container ships are getting bigger, and container stacks are growing higher. When waves hit the front of the vessel, they can create a rolling effect which dislodges the containers and causes them to topple over and in some case fall over-board.

Chinese New Year

We are hearing that some local governments in China are encouraging workers not to travel for the holiday by offering bonuses to those who continue to work through the holiday.

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