Retail supply chain suffers as holidays approach

NEW YORK — Hurricane Sandy’s economic effects are reverberating beyond areas hit by the storm as businesses warn customers of delays, try to get merchandise out of closed ports, and face canceled orders.

In addition to shutting down shipping terminals and submerging warehouses, the storm tangled deliveries with downed power lines, closed roads, and scarce gasoline in parts of New York and New Jersey.

The supply chain is backing up when retailers normally bring final shipments into stores for the holiday shopping season, which retailers depend on for annual profitability.


‘‘Things are slowing down,’’ said Chris Merritt, vice president at the trucking company Ryder. ‘‘This whole part of the supply chain is clogged up.’’

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FedEx, for example, has rented fuel tankers to supply its delivery trucks. Ryder has been hunting down rental trucks to add capacity. CSX, the railroad, was advising customers to expect delays of at least 72 hours. And retailers from Amazon to Diane von Furstenberg have told customers to expect delays.

Many economists expect the storm to shave up to half a percentage point from growth in the fourth quarter. Growth was estimated to reach an annual rate of 1 to 2 percent before the storm.

Economic losses are expected to be significantly lower than from Hurricane Katrina in 2005, but this storm’s impact has been intensified because the Northeast is densely populated and is responsible for about $3 trillion in output, or 20 percent of US gross domestic product, said Gregory Daco, a senior economist with IHS Global Insight. ‘‘Part of what was lost will be delayed, but part is lost forever,’’ he said.

Last week, the Port Authority of New York and New Jersey said all of its major marine terminals were closed. While parts of the system have started to reopen, delays persist. The New York area’s port system last year handled $208 billion in cargo.


As a result of the closings, delays may ripple through the holiday season, said Paul Tsui, chairman of the Hong Kong Association of Freight Forwarding and Logistics. As of Sunday, almost all rail service from the ports was suspended, terminals were damaged, and much of the ports’ equipment was being reviewed to see if it still worked.

Several customers with facilities in the New York area told him ‘‘their warehouses are totally damaged.”, an online home-goods retailer, said 1,300 of its 4,000 suppliers were hit by things like a loss of power and flooding. Niraj Shah, chief executive, said his site removed two-day shipping offers and took some merchandise off the site. For suppliers who cannot get up and running soon, Shah said, ‘‘at this point, it is too late to get more inventory in for the holidays.”

Robert Van Sickle’s Polka Dog Bakery was relying on a shipment of cardboard tubes from China with a merry design, to hold holiday dog treats. But the New York Container Terminal was devastated, and the freight forwarder can’t track down the containers. It is too late to reorder the tubes, and Van Sickle has tens of thousands of baked dog treats piled up at his Boston headquarters. He told customers he probably could not fill their orders.

‘’Without this product, we’re in trouble,’’ Van Sickle said.


Yet he has been struggling with a sense of guilt for worrying about dog food containers when the storm destroyed homes and killed people. He is considering repackaging the biscuits and donating proceeds to storm-relief efforts.