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The supply chain crisis ‘was allowed to fester for a number of months’: AAFA CEO

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American Apparel and Footwear Association CEO and President Stephen Lamar breaks down the constraints supply chain obstacles have placed on retailers.

Video Transcript

AKIKO FUJITA: Welcome back to Yahoo Finance Live. Congestion at West Coast ports are starting to show signs of some easing. That's at least according to the White House and some key retailers, including Walmart. But our next guest says it is still a big uphill battle to get those products on store shelves. Let's bring in Stephen Lamar. He's American Apparel and Footwear Association CEO and president. Steve, what are you seeing on your end? I mean, it sounds like a lot of the big retailers have said, look, we may have passed the peak or at least seen the peak. You say it's way too early to say this is all behind us.

STEPHEN LAMAR: Right, well, certainly, no one is talking about Helicopter now. It's one of the dozens of ships that are still stuck at anchor in the San Pedro Bay and hanging the mission accomplished sign. We have seen the White House get very much engaged, which is important. This requires a lot of coordination from a number of different agencies, a number of different actors. And they played an important role to make sure that that coordination is happening.

You know, this is getting different parts of the logistics chain to kind of operate in coordination to move things. You know, you don't want to solve one part of it, and then that would just back up another part of it. So you've got to get them all to operate together and consistently do that and then stay on that. This isn't a one and done situation.

That said, the supply chain crisis was allowed to fester for a number of months. And we've been warning about this all year long. And it wasn't until the late summer that we really started to see the White House really engage, engage at a very, very helpful way, but really engage. And it's going to take a long time to unwind the crisis. The good news is, is, you know, consumers are out, they're shopping both online and in stores. And we're hoping that we'll have a successful holiday season because it's so important for so many in our consumer-driven economy for a good, strong holiday season.

ZACK GUZMAN: Yeah, when you talk about the holiday season and the fact that a lot of these shipping delays build on each other and stack up, and you think about it already being in December now, I mean, what are you seeing in terms of the ability to stock the shelves for the holiday season from some of the retailers that you represent and what they're seeing in their own stores?

STEPHEN LAMAR: Right, well, there's challenges. I mean, you know, consumers are going to be frustrated. They're going to find products out of stock. They're going to find empty shelves. They're going to find higher prices. I mean, that is the sad reality of a logistics crisis that was allowed to fester for so long. You know, it's already the fourth day of Hanukkah. We're coming up on Christmas pretty soon, other holidays as well. So there is a lot of energy being directed at this time.

You know, one of the things that we've been seeing-- we saw a little bit of this last year and it certainly really, really was apparent this year-- is the holiday season starts earlier, and it will go longer. I mean, it will go into January. I mean, people will be still finding products that they couldn't get, whether it was this week or next week or in the approach to Christmas. They'll still be looking for those products later on. You know, people are still going to be looking for deals.

And in some cases, the products that they're looking for are still stuck in-- stuck at port or still stuck in these ships that are still anchored off the coast of Long Beach and Los Angeles. So it takes time to unsnarl these supply chains. And unfortunately, we weren't able to get them unsnarled enough so that we could have the holiday season I think we all would have liked to have had.

AKIKO FUJITA: Steve, what are you hearing from your members about the enthusiasm around the holiday shopping season? You know, we had Cyber Monday this week, [INAUDIBLE] for the first time. I mean, there's some debate about whether, in fact, it's just not about Cyber Monday anymore, that there was a bit of a pull forward, which is why not everybody went and bought. But what are you hearing from your members about foot traffic, to what extent they are seeing a bump from the early days of the shopping season?

STEPHEN LAMAR: No, thank you. That's a great question. There's a lot of enthusiasm there. As you mentioned, the holiday season is a lot longer than it's ever been before. And part of it was as people were anticipating the supply chain crisis, we and many others were out there saying, buy early. You know, don't wait until the last minute. I think that's always great advice, but it was especially important advice this year, because we were seeing that the supply chain disruptions were going to lead to empty shelves, were going to lead to higher prices.

And we're warning consumers get out there and get there as soon as you can to buy so you won't have disappointments, either, you know, under the tree or when you're trying to provide presents at this time of the year. But, you know, and again, Cyber Monday, Black Friday, we're really talking about a season, not so much a particular day. People have been looking at Cyber Monday as, you know, in our e-commerce world, almost every day is Cyber Monday now because there is so much more business that is done online. And I think that's something that's going to stay with us for a long time.

ZACK GUZMAN: Yeah, and lastly here, too, I mean, we're talking about how long some of these issues might persist. We heard that from Jay Powell earlier this week. You know, he was talking about inflation concerns and how, you know, a lot of their models maybe didn't predict some of the supply chain issues that manifested in the pandemic. So I mean, when you look out and take into account what you're hearing from your members, does mid 2022 sound realistic to start seeing some of these pressures abate? Or is that just too optimistic?

STEPHEN LAMAR: Well, it's interesting you mention mid 2022. In July of next year, the contract which controls the West Coast labor for all of the West Coast ports, that expires. So, on top of all of the other problems that we've been experiencing, we're going to have a labor contract negotiation right in the middle of this effort to recover from this crisis. We've been urging the parties to come to the table and either extend that contract, and there was an effort to do that earlier this month, or to renegotiate that contract, get it out of the way. And the last thing we need right now is a new speed bump that materializes and distracts the recovery.

So are we going to see an end to this by mid 2022? Boy, I hope so, but I don't know if that's possible, given how long it's going to take to unsnarl the current shipping crisis and how long it's going to take to negotiate this new labor contract and some of the other problems. And of course, on top of everything else, we still have the concerns and the uncertainties associated with COVID. With the new omicron variant, a lot of information we don't know. So given all of those uncertainties, we just keep focusing the message on, let's help unwind these supply chains. Let's make sure there's relief so these companies that are managing these epic freight costs, these high port fees, are able to manage those during this time.

AKIKO FUJITA: Yeah, and we've learned throughout this pandemic, Steve, that it just takes one port shutdown for it to have ripple effects across the world. So we're going to continue to watch some of those key hurdles you're talking about. Stephen Lamar, American Apparel and Footwear Association CEO and president, good to talk to you today.