Contributing to cost increases are the extra expenses required to reroute merchandise to temper delays. According to a recent report by Macquarie Research, it costs roughly twice as much—$4,000—to ship a 40-foot container from China to the East Coast instead of the West Coast.
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Air freight also comes with a steep price tag. Macquarie referenced Ann Inc., which said before the port issues escalated that it sustained $5 million in incremental air costs for the third quarter. Adding to retailers' woes is that late product deliveries often lead to markdowns on items that otherwise may have sold at full price.
And it's not just the labor issues at the ports, there are other factors contributing to an increased interest in moving the supply chain to the U.S., Vaughan said. For one, as retailers look to shorten the amount of time it takes them to move merchandise from production to the selling floor, domestic sourcing will become more beneficial.
This includes the fact that more retailers are looking to incorporate "read-and-respond" capabilities, meaning they place smaller initial orders, wait to see what items sell briskly, and then place additional orders accordingly.
Other reasons include rising wages in China, and the halo surrounding items that are made in the USA, Vaughan said.
"There's a customer preference," he said. "I think people want to hear that."
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Among companies that have already made the transition are K'Nex, which recently shifted the manufacturing of its Lincoln Logs toy to the U.S., and baby seat maker Thorley, which moved some of its operations here.
Still, while more retailers are expressing interest in domestic sourcing, Vaughan said it will be a slow shift back to the U.S., where the economy has become mostly service-oriented.
"It's not one of those things that's immediately going to switch," he said, adding that there's a low supply of workers in this field. "[But] where there's a need, there would become supply."