Premium Joy, based in Walnut, California, makes a variety of foam toys, including play mats, jigsaw puzzles and building blocks for kindergarten and elementary-grade kids. It sells them on its website and on Amazon.
One of its most popular toys is its Under the Sea-themed floor foam jigsaw puzzle. “Pre-pandemic we sold as many as 5,000 to 6,000 of that puzzle every year,” said Hassan Alnassir, the company’s founder and owner.
Alnassir said the company is discontinuing production of the puzzle because it’s become too expensive to manufacture and import the foam products from Taiwan.
Continuing to make the puzzle just wasn’t an option, he said.
“The main issue that prompted us to decide to discontinue the puzzle despite its popularity is that sea freight cost has increased substantially due to the pandemic,” said Alnassir, adding that shipping rates for the business are almost “four times” higher compared to what they were in early 2020.
“Last year in February the cost for a 20-foot [shipping] container was $1,900. This June, it’s over $7,000,” he said.
Not only are companies struggling to meet the heightened demand by having enough inventory on hand following last year’s global recession, a shortage of shipping containers and bottlenecks at ports have made matters worse and increased the cost of moving products around the world.
Alnassir said that in the past he considered getting his products made in the United States but couldn’t find a manufacturer that had the specialized equipment he needed.
Now, he is again exploring the possibility of bringing production to America, but with a pivot.
“We’re looking into making them here in the US, which will probably be cheaper,” he said. “Instead of using foam, we’ll make the products with cardboard.”
Escalating shipping costs and container shortages are a real challenge for toymakers and are hitting smaller companies especially hard, said Jim Silver, a toy industry analyst and CEO of Toys, Tots, Pets & More, an industry review website.
“They’re definitely more impacted because they have fewer options,” said Silver. “Larger companies like Mattel and Hasbro have multiple factories in different countries to source their products. Also, if you are a shipping container company, you’re more likely to favor your bigger clients like Mattel and Hasbro with your business.”
Alnassir said the company hasn’t as yet got an offer for the $28,000 puzzle. If he does get a buyer, he said he will use the money to help start production domestically. “It could take some time,” he said.
— CNN’s Hanna Ziady contributed to this report