'Buy it early!' Bank of America warns of supply issues this holiday season

·Senior Writer
·2 min read

People may be talking about pumpkin spiced lattes in August, but this year there may actually be a good reason to think about the “Holiday Season” earlier than usual.

A recent note by Bank of America analysts looked at the state of the current freight backlog at the Port of Los Angeles and found that availability of many goods may be pinched during the biggest shopping season. The takeaway? “Buy it early!” the bank wrote.

These issues come while previous bottlenecks have already created an inventory slump that is unprecedented outside of a recession.

Currently, goods destined for the U.S. that are in route now (or will be next month) should arrive by November – which is good news of a sort.

“That said,” the bank continued, “if a retailer is shipping in November, there is a big risk that product will not arrive on time.”

The previous window of six weeks from order to delivery in the U.S. has expanded to as many as 10 weeks given the post-Covid logistical backlogs. Not only is that not ideal, but it’s also many times more expensive than it was last year.

A container ship makes it way toward the Port of New York and New Jersey in Elizabeth, N.J., Wednesday, June 30, 2021. (AP Photo/Seth Wenig)
A container ship makes it way toward the Port of New York and New Jersey in Elizabeth, N.J., June 30, 2021. (AP Photo/Seth Wenig)

“Pricing is up to $20k/box (if you can get one) compared to $2.5k/box last year,” the bank wrote, referring to the price of a standard shipping container.

According to BofA, the Port of LA believes that prices will continue to be expensive for as much as another six months.

The backlog, which began from demand shock thanks to reopening after supply shock from Covid closures, has worsened since early July because of a handful of factors: the Delta variant, labor shortages, container shortages, shortages of certain products, and a host of transportation issues have disrupted the normal flow of goods. Back-to-school supplies are getting hit by the same supply chain hurdles now.

Even after the end of the holiday season, the bank said the Port of LA expects demand to continue to be strong and supply levels to stay strained.

Already, the Association for Supply Chain Management has warned about rising prices stemming from supply chain complications and the need to start holiday shopping well before Black Friday.

To deal with these constraints, “expert elves” are needed, Abe Eshkenazi, the association’s CEO, quipped in early August.

As all of this has shown, you can’t plan for everything. But we all know what season is coming.

Ethan Wolff-Mann is a writer at Yahoo Finance focusing on consumer issues, personal finance, retail, airlines, and more. Follow him on Twitter @ewolffmann.

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, YouTube, and reddit

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting