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Santa gets a little help from imports

Marketplace Staff Dec 21, 2006

TESS VIGELAND: Everybody knows Santa’s got his own workshop up at the North Pole where they make all kinds of fun toys for good little girls and boys. Given the population explosion he’s probably outsourcing some of that work to other parts of the globe. And that means he’s got to find ways to get TMX Elmo and Playstation 3 from workshop to mall when the sleigh is full. Rachael Myrow of station KPCC reports from one of Santa’s import hubs.

RACHAEL MYROW: Santa’s North Pole operations have long since moved to Asia. So like everything else made there, toys have only two ways to get here: by air or by sea.

At the Port of Long Beach on a recent morning, a steady stream of container trucks pull up alongside a megaship called the OOCL Long Beach. But the containers are empty, and a crane lifts them from the trucks to the ship. We’ve arrived too late to watch the Christmas rush in action, says Port spokesman Art Wong.

ART WONG: Our Christmas season at the port is August, September and October. Most of the retailers want these products in their stores probably by about Halloween, or even a little bit earlier.

Wong says retailers have to think several steps ahead to stay stocked throughout the year — but especially during the holidays.

WONG: The manufacturers in Asia may take a week or two to fill that order. It takes two weeks for that product to come across the ocean on a ship. And then it takes a few weeks to go across the country. And so, if you haven’t given yourself a month or two to get your order filled, you’re not going to get it on the shelves. If you’re thinking that last-minute, you’re probably going to fly that cargo into this country, and that’s going to cost you much, much more.

Charlie Woo knows all about that. He’s CEO of MegaToys, based in downtown Los Angeles. Woo considers himself a savvy negotiator when it comes to getting the best price on shipping. But back in 2002, he got thrown for a loop after he’d arranged to ship a container-full of very-popular-at-the-time radio-controlled toy cars.

CHARLIE WOO: That was the year that the port had a shut down, because of the labor dispute. So I had millions and millions of them stuck in harbor. I had to fly them in. And you know, the product cost me about $3 to manufacture. But it cost me $5 to bring them in through an airplane. And I have to lose $2 an item selling it to the customer that already placed the order.

Woo eventually got his millions of cars after Christmas.

WOO: So, you know . . .

TMX ELMO: Ha-ha-ha-ha-ha. Give Elmo a break, please!

Some years, there are happy surprises, when a product takes off unexpectedly. But that creates a shortage. The Elmo TMX, for instance, retails for 40 bucks. Three months after it debuted, Elmo is still “temporarily out of stock” at major retailers. But people are selling them on online auction sites for a premium. Elmo’s maker, Fisher Price, doesn’t get any of that markup, says Woo.

WOO: The fact that you have a hard time buying it means that it’s a surprise to even the manufacturer themselves. You know, they won’t be able to maximize their profit.

Even though Fischer Price keeps packing the retail pipeline with more furry red monsters.

TMX ELMO: Ha-ha-ha-ha! That tickles!

Despite the holiday crush, there are no visible signs of panic at the United Parcel Service regional hub at L.A./Ontario International airport. Sure, individual shipping orders spike in December, but most of the businesses shipping now planned to do so long ago. So, what would they choose to fly in? Stuff that sells for such a high price, it offsets the cost, says Noel Massie, VP of UPS for the Inland Empire.

NOEL MASSIE: Cell phones, iPods . . . technology’s going to be number one.

While UPS flies through the night to meet Santa’s deadline, most toymakers have this holiday season in their rear-view mirrors. Right about now, they’re calling retailers to pitch new toys for Christmas in 2007.

In Los Angeles, I’m Rachael Myrow for Marketplace.

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