Supply Chain Woes To Impact Holiday Beauty Sales

Sales of fine fragances, upscale skin care formulas and the like could be impacted by supply chain woes this holiday season, according to experts. At the same time, soaring inflation, poor weather conditiions and growing consumer demand have created major kinks in the supply chain. Sources say that supply trips from Asia to North America usually take six weeks; now, they're nearly double. At the same time, energy issues in China and Europe are impacting supply chains and raising costs. Nick Benson, founder of Atelier, a company that aggregates supply and demand in beauty, told WWD that some factories in China are at a 15% capacity or less.

One expert said at the start of  Earlier this month, The Port of Los Angeles expanded to a 24-hour, seven-day-a-week operation in an effort to relieve pandemic-related supply chain issues and clear record-breaking backups of container ships at the Ports of LA and Long Beach. When cargo ships finally dock in ports such as Los Angeles and Long Beach, CA, there's no one to move cargo. Getting cargo from Shanghai to Los Angeles isn't just laborious…it's expensive. Before the pandemic, it cost about $2,000 to send a container from Shanghai to LA. By the beginning of 2021, that same trip cost as much as $25,000.

According to Chris Spear, president and CEO of the American Trucking Associations (ATA), the US has a record hortage of around 80,000 truck drivers—an increase of roughly 30% from before the pandemic, Spear said. Spears told CNN that, like other workers across the US, truckers are quitting their jobs in search of better wages, benefits and working conditions. The industry has also struggled to hire new staff due to its long hours and prolonged periods away from home.

Supply chain issues have been worsened by retailers and manufacturers overordering or placing orders too early amid panic over the massive supply chain crisis, said Jonathan Savoir, CEO of supply chain technology firm Quincus. He told CNBC that the situation of retailers overstocking is causing a bigger crunch on capacity, and leading to what he called a “bullwhip effect.” That’s a term describing how small changes in demand at the retail level can progressively cause larger movements in demand to impact wholesalers, distributors and manufacturers. The supplier of raw materials will feel the biggest impact, according to Savior.

That's all bad news for beauty companies sourcing raw materials and packaging components ahead of the busiest time of the year.