By Lisa Baertlein and Helen Chernikoff
LOS ANGELES/NEW YORK (Reuters) - Toy store ownerEric Masoncup is playing a high-stakes game as he readiesholiday orders in this shaky U.S. economy: If he delays toolong, he will not only pay higher costs to fly in goods, herisks late deliveries in the last-minute crush.
High unemployment and a stalled U.S. economic recovery aregiving retailers few reasons to feel confident about theirprospects during the fast-approaching holiday season.
"Every year at this time, you're throwing the dice," saidMasoncup, who owns Geppetto's Toy Box in Oak Park, Illinois,with his wife Brandy, and is still hoping for signals that willhelp him get his holiday order just right.
The couple is working hard to regain its footing aftergetting stuck with too many toys in the dismal holiday seasonfollowing the collapse of Lehman Brothers in September 2008.
"I cut back last year. This year, I don't know what to do,"said Masoncup, who will receive goods by air or from importerswho brought goods in early by ocean transport.
Meanwhile, toy maker Hasbro Inc has been workingsince this summer to convince store owners to take earlydelivery of holiday shipments brought over months earlier thanusual due to space shortages on ocean cargo vessels.
CHRISTMAS IN JULY?
It appears that Hasbro was not the only company doing someearly shipping.
The Port of Los Angeles, the nation's busiest containerport and a major entry gate for apparel, footwear and toys, sawimports peak in June, July and August -- months earlier thanthe traditional holiday peak in October.
"It was holiday in July," said Kathryn McDermott, deputyexecutive director of the port's business development group.
Import cargo volume at the nation's major container portsis forecast to rise 15 percent this year to 14.5 million20-foot equivalent units (a measure of cargo volume), accordingto a Global Port Tracker report released by the National RetailFederation and Hackett Associates.
"2010 has already hit its peak and numbers will declinethrough the remainder of the year," the report said. Whilevolume is expected to improve significantly from 2009, it wouldremain 12 percent below the high reached in 2007.
This time last year, ocean shipping was in the dumps.Container ship lines, which are estimated to have lost $15billion globally in the crisis, parked hundreds of vessels andthe two main container builders essentially shut their doors.
Port traffic peaked early because retailers wanted toguarantee space on a reduced number of slower-traveling shipsand avoid hefty peak season surcharges, Hackett Associatesfounder Ben Hackett said. Inventory restocking and latedeliveries also contributed, other experts said.
The early holiday haul included Christmas trees and holidaylights that will go on sale at Big Lots, the company'smerchandising chief, John Martin, told Reuters.
Dollar General Chief Executive Rick Dreilingrecently told analysts the discounter has been bringing inmerchandise early to avoid ocean shipping capacity shortages.
"Now you're starting to see the seasonal merchandise startto roll in," Dreiling added.
AIR MAY FARE WELL
While some retailers had holiday must-haves deliveredearly, many are reluctant to put all their cards on the table.
"Sales are quite depressed, they're concerned going into itthat it could be a disappointing holiday season," said DanSellers, president of Pittsburgh-based Genco Transportation andLogistics.
The hesitation could be good news for air shippers likeFedEx and United Parcel Service.
"In uncertain times, air freight is your mode of choice.When you have more confidence, you'll see a shift back toocean," BB&T Capital Markets analyst Kevin Sterling said.
While the cost of air freight is much higher than ocean,Sherif Mityas, a partner in the retail practice at consultingfirm A.T. Kearney, said the bigger risk to retailers who delayordering is that they have too few items on hand during theholidays "because nobody was feeling that confident to bringtoo much inventory in."
The bill for air freight is about 10 times more than thecost of ocean transport, said Steve Horton, principal at HortonGlobal Strategies, which counts retailer Williams Sonoma Inc among its clients.
And retailers who are willing to pay that premium may findit is not the last-minute solution they expect.
"Air is full, too," Horton said. (Reporting by Lisa Baertlein; editing by Mary Milliken andMatthew Lewis)