
Companies Take Actions to Mitigate Asian Supply Chain Issues
Companies Take Actions to Mitigate Asian Supply Chain Issues

Adidas, Columbia Sportswear and Acushnet Company are among industry firms being forced to implement new operational strategies to offset any potential slowdowns of product deliveries through the remainder of 2021.
With order demand for Spring 2022 running up “high teens to low 20 percent,” Columbia Sportswear will incur most of a planned $4 million in incremental ocean freight costs this year in late 2021 to ensure on-time product deliveries to wholesale partners.
Adidas, meanwhile, is enacting five strategies to combat spiking COVID rates in Southeast Asia, which are slowing or halting footwear and apparel production, and possible additional delays in ocean container deliveries from Asian markets.
“We remain optimistic the disruption will only be temporary, and our mitigation efforts will help us to reduce the overall impact,” Adidas CEO Kasper Rorsted told analysts last week. “We expect the current situation to start improving later this month leading to a largely operational sourcing network at the end of the third quarter.”
Flexing its sourcing muscle, Adidas has been able to secure additional capacity for 30 million units and will utilize airfreight to move key, higher-priced products to hit delivery dates. Additionally, the Three Stripes is re-allocating some production away from Vietnam to other sourcing markets and redeploying existing marketed inventory to help reduce wholesale partner cancellation rates and discounting.
With less than 1 percent of its total population, or approximately 820,000 people, fully vaccinated, Vietnam, a major footwear and apparel sourcing hub, extended its coronavirus restrictions late last week until Aug. 22. They had been set to expire on Aug. 7.
Columbia, which has been told to expect elevated freight charges through the first half of 2022, doesn’t want to take any chances on getting its key Omni-Heat Infinity products launched in stores later this year. That’s why it’s leaning on air freight.
“…We’re continuing to experience that 3- to 4-week delay generally speaking, as it relates to tying up our inventory receipts and our wholesale shipments,” said EVP/CFO Jim Swanson. “And so, what we see is some push out, out of the third quarter into the fourth quarter.”
Meanwhile, despite strong demand for its golf products, Acushnet Holding Co. is facing the dual challenge of spiking COVID-19 cases in key sourcing markets and raw material shortages. The company has temporarily reduced production at a golf glove factory in Thailand.
“And we expect that the environment for our apparel and Titleist gear businesses will continue to be challenged by tight raw material availability and additionally, the current lockdowns in Vietnam will impact Titleist bag and headwear availability,” CEO David Maher said.
The National Retail Federation believes Congressional passage of infrastructure legislation would help improve labor, equipment and capacity and be a key step toward creating a much needed 21st century supply chain. It would also help alter the current landscape—dominated by a lack of shipping capacity combined with port congestion, according to Ben Hackett, the founder of a firm that tracks container imports.
This month, U.S. ports are forecast to import 2.37 million Twenty-Foot Equivalent (TEU) units, which would be 12.6 percent higher than Aug. 2020 and result in the highest monthly container import total since 2002 when the NRF began tracking them. The trade group says that is the result of many retailers moving up shipments as part of their respective risk mitigation strategies to ensure sufficient inventory will be available to consumers for the holiday shopping season.