Shipping
News
Customs Delays and Wal-Mart Threaten
Illustrated Book Publishers' Holiday Offerings
FROM PUBLISHING
TRENDS (NOVEMBER 2004)
While
merchants and shoppers alike are gearing up for the
holiday season, publishers are giving a collective sigh
of relief. Recent delays of Asian imports nearly squelched
many publishers’ holiday cheer well in advance of returns.
While the fourth quarter looms large for manufacturers
and retailers, it’s the only quarter that matters for
publishers of four-color illustrated books — a category
that includes many childrens books, as well as those
artful tomes that serve so nicely as front-of-store
gift suggestions. Since they have always been printed
abroad — until recently two-thirds were printed in Asia
with the balance in Europe, but today about 99% are
outsourced to China and Hong Kong — publishers have
always madly dashed to get those books to their warehouses
by September at the latest. If they missed the cut-off
for books in stores within the next month, they could
write off their big chain promotions. Judging by what
PT has heard, 2004 can go down as the Christmas
that shipping woes almost sank.
Various theories exist to explain the delays: everything
from increased homeland security at ports to a trucker
shortage. And to make matters worse, the largest US
importer, Wal-Mart, has been known to elbow its
way to the front of the line at ports — a very long
line, indeed, as there have been 30 to 40 ships anchored
off the West Coast waiting to dock in Los Angeles and
Long Beach in recent months, according to William
Armbruster, editor of Shipping Digest. Many
in the industry also blame Wal-mart’s new “just in time”
inventory control, which compressed four months of shipments
into two and essentially made it impossible for others
to get containers. But whatever the reasons for the
east-to-west transport system’s current gridlock, it
is compounded by the normal third-quarter push in advance
of the year’s biggest selling season.
Though some publishers only recently felt the effects
of port delays, problems have existed for a while. Freight
forwarder and customs broker Raymond Ambriano,
VP/COO of Meadows Wye, says much of this started
in July, when additional customs regulations went into
effect. But, he attributes it to many factors, starting
with the depressed economy of the past few years that
prevented transportation companies from upgrading their
equipment or investing in new labor, which has resulted
in a serious shortage of dock workers. Combine this
with the rumored economic upswing, making everyone optimistic
about potential year-end sales and hence moving a lot
of product, and your normal headache becomes a migraine.
Ambriano claims the delays add four to six days (and
seven days at its worst) to the normal delivery schedule.
“The publishers who are suffering the most are those
that do their own shipping, and they’ve nickel and dimed
their servicers … they’re the first ones to be bumped,”
Ambriano explains. Also, because only full containers
are shipped, smaller publishers have to ship books in
mixed-goods containers, which are more likely to be
singled out for a physical exam. (He estimates about
20-25% of containers get X-rayed, while only about 5%
of containers are physically inspected. Almost all containers
from “high-risk origins,” such as India or Indonesia,
are X-rayed.) Looking on the bright side, he estimated
in late October that “in the next three to four weeks,
it should be better.” However, he pointed out that steamship
lines have proposed extending their peak-season surcharge,
which indicates they think the volume will continue
to be high.
International trading experts probably saw this port
jam coming, with the US’s growing dependence on Asian
countries for manufacturing. However, outsourcing only
remains viable if it is efficient, and efficiency requires
the free flow of ships. Publishers have always relied
on others for transport, but these relationships are
critical to a publisher’s P&L. In the same way that
Meadows Wye gave its clients a heads-up before July,
PGW is thinking ahead. Its new “global logistics
company,” called Publishers Logistics Worldwide,
intends to help publishers cope with the problems that
arise with outsourcing to Asia, particularly “lack of
transparency,” inaccurate estimates, delivery date promises,
and lack of container space; as well as problems once
the shipments reach the US, such as truckers’ unwillingness
to allocate full-load trailers to partial load shipments,
according to Chris McKenney, Executive VP/COO
of PGW. He says 35% of its clients’ printed material
comes from Asia. Out of about 35 PGW publishers that
print in Asia, about 25 are already using the logistics
services, which unofficially started this summer. With
an Oracle-based tracking system, PLW organizes the publishers’
print runs so they can consolidate titles into PLW containers
and link the shipments with freight networks in the
US. It will be extended to Europe “soon,” with a “consolidation
point” in the UK, and is working to have similar facilities
in place for US exports to Australia, Asia, and Europe
by spring 2005. McKenney estimates the service will
save publishers 10-70%, depending on the sizes of their
shipments (more cost savings for smaller ones). Regarding
the recent delays, he said, “We haven’t seen any titles
that aren’t going to make it into Amazon’s supply
chain, or B&N’s, or even our independents.
It’s been much more of an annoyance than a hard-core
sales problem — but if it doesn’t improve by late November,
then we really will have some failed deliveries.” The
ports say it will ease up, and he’s skeptical, but optimistic.
Throwing
Schedules to the Wind
Producing
high-end art books was always complicated, and printing
and shipping from abroad was always somewhat unpredictable,
but the port delays have exacerbated the already complex
process, many say. Jeff Servais, VP of Operations
at Motorbooks, says none of his books has been
more than two weeks late, but the lag has required a
lot of juggling. Motorbooks’ freight forwarder, Phoenix
International, is asking for four-weeks notification,
rather than the usual one or two, for when merchandise
will be ready to be loaded in Asia. Servais has no qualms
about laying the blame on Wal-Mart, which owns 35% of
all freight coming from Asia. In addition, he said US
Customs in addition to its spot-checking, is also looking
for counterfeit products and checking for valid licensing
arrangements. “This means they open the container, unload
selected pieces of merchandise and remove them to a
spot where they can open the cartons and really check
the merchandise,” he explained. The trains are also
a factor, he said, with those coming into Minneapolis
rail yards finding an excess number of containers waiting
to be processed and picked up by trucks, and no space
to unload because of congestion.
Janet
Behning, Production Manager at Princeton Architectural
Press, says she is still learning the nuances of
shipping in a post-9/11 world. For example, all containers
leaving Italy (where they print occassionally) must
sit for 48 hours before being loaded onto a ship. When
she spoke to PT in mid-October, she had just
received her third notice for the month that one of
its titles coming in from Hong Kong had a customs hold.
“The addition of a customs inspection means the final
segment of the delivery cannot be scheduled until the
shipment is released,” she explained. “Even if the actual
hold is only a day or so, the final delay can be three
or four days longer by the time a truck delivery can
be arranged,” which adds up to a one- to two-week delay.
At
Abrams, they have started building two to three
extra weeks into their schedules, says President/CEO
Michael Jacobs. But, he said its freight forwarder
Damco was good at forewarning the company that
the changes in security policies that were implemented
in July would slow down delivery, and urged them to
get their books in early. “For publishers like us …
the fourth quarter is critical. I’m not sure the impact
[of the customs checks] was apparent to us until it
was too late. It takes a long time to rejigger a schedule
when you’re planning as far in advance as we have to,”
Jacobs explains. Though he’s confident all of Abrams’
planned fourth-quarter list will make it to store shelves
in time for the holidays, he admitted, “I’m a little
more concerned about how much time the product has to
sell through and be re-ordered before the holidays.”
Ina Raghunandan, VP/distribution at Abrams/STC,
said she has been adding a month to the schedule for
final delivery of books. She blames the spot checks
that entail opening not just containers, but cartons.
Both Vendome’s co-owner Mark Magowan,
and Terry Downes, VP/Operations at Disney,
also praised Damco for giving them the heads-up back
in the spring. “Where we could, we changed our publishing
schedule on the front end,” said Downes. And when that
wasn’t possible, he added time to the back end and let
his suppliers know the later dates, adding that what
used to be one month for transit is now scheduled allowing
for six to eight weeks. Plus, Disney had been routing
its shipments to Seattle to avoid the gridlock in L.A.
Meanwhile, at Rizzoli, it has become standard
practice to add two weeks to their schedule in expectation
of delays, says Alan Rutsky, VP of Finance. He
thinks the delays are partly from increased homeland
security, but more a result of containers not getting
to the rails on time. Though no publishers admitted
that their books would miss the holiday selling season,
PT heard of one (Jamee Gregory and Charles
Davey’s New York Apartments, published by Rizzoli
and delayed until late November) — and this suggests
to us that there are others.
©2004
Publishing Trends
