DC Velocity - December 2009

Bergmann noted that 3PLs are absorbing the increases or trying to pass them on to their customers. Some shippers have accepted relatively small increases from the 3PLs, he added.

Bergmann said TOYSA believes carriers

just want to return to some level of pricing normalcy and are not looking to gouge his members. But that’s little solace to an industry already facing sluggish demand during its most important selling period. “It’s quite a conundrum for us,” he said.

Get in gear!

The toy industry’s challenges won’t stop when Santa Claus packs it in for another season. In August 2008, President Bush signed legislation requiring that by this February, manufacturers and importers must certify that their toys have been tested and are in compliance with mandatory safety standards. Importers are required to have compliance certifications available to inspectors at the time the products are examined.

The legislation arose from several incidents in recent years involving the safety of U.S. toy imports, notably a 2007 incident when Mattel Inc. had to recall nearly 1 million Fisher-Price toys after discovering its supplier had coated their surfaces with lead paint.

David J. Evan, a New York-based attorney who advises companies on the new law, said the testing process and the potential for negative test results could disrupt the supply chain at any point. If inspectors snag a non-compliant product or product component, the goods can’t be distributed until the affected item is removed or replaced. This could result in shipment delays, product recalls, and stock-outs, Evan warned.

The New York-based Toy Industry Association has developed what it calls an industrywide process—which includes extensive product testing—to ensure compliance. In October, the group announced that manufacturers could start applying for certification under its new “Toy Safety Certification Program.” Toys certified under the program are expected to appear on store shelves in 2010, the association said.

Amy Magnus, district manager at A.N. Deringer Inc., a St. Albans, Vt.-based customs broker, freight forwarder, and 3PL, said manufacturers and importers should expect government inspectors to be aggressive in enforcing the law. Magnus added that other agencies aside from the Consumer Product Safety Commission (CPSC) now have the power to place manifest holds on cargo to satisfy their own requirements. She suggested that companies seek the help of a broker or an import specialist to avoid stiff fines for non-compliance.

Evan said the CPSC is adding staff at U.S. ports, which will result in more inspections. If a product is stopped at a port due to compliance issues, the CPSC and the U.S. Bureau of Customs and Border Protection will conduct a field test and send samples to CPSC facilities, where examiners can place a hold on the goods until they determine if the product is in compliance. Goods that fail the compliance test will not be released into U.S. commerce.

Levin of Techno Source said toy manufacturers must balance the ability to test thoroughly with the need to quickly move products through the process so they can hit store shelves on schedule. They must also convince retailers to accept testing reports that manufacturers already have on file so they can avoid paying for the same tests to be re-run for each retailer, he added.

“If every retailer begins to require tests be re-done just for them, it will create significant unwarranted expenses and delays,” Levin warned.

Regardless of the different issues that could potentially fracture industry interests, Levin said all the players are on the same page as to the overriding priority.