As retailers and suppliers head into the holiday season, it’s become clear that while wholesale price increases across nearly every category have boosted revenue, unit volumes have declined. What is unclear, however, is how long consumers will continue to absorb the price increase passed on at retail.

And while shipping delays from China have eased at ports across the U.S., the rates paid to deliver those goods to warehouses have nearly doubled. Delays are running 1-2 weeks, and expected to continue into the first half of 2023.

Coca-Cola Co.’s wholesale pricing will continue to be “ahead of normal” in 2023, despite its making adjustments in packaging to lower costs, CEO James Quincey said in releasing third quarter earnings on Tuesday. And Proctor & Gamble said while it raised prices 9% in the third quarter to increase sales 7%, unit volumes declined 3% mostly due to lower sales in Russia.  The company is forecasting profit for the current fiscal year to be flat due to $600 million in extra commodity and freight costs it didn’t expect in the third quarter.

One licensing executive reported they are forecasting their business will be down 20% in 2023 because of higher costs and retailers buying more cautiously after being stuck with excess inventory this year.

“I think a lot of retailers may say they bought too much inventory and need to buy less and that might be healthy,” the executive said. “Our orders are up going into the next year, but we have three to four accounts that may be down 30-40%. I am okay with that because I don’t need to hit big sales numbers. I want to hit numbers that will make everybody healthy and slowly grow.”

The wildcard will be consumers who are tightening budgets in the face of inflation at a four-decade high in the U.S. And while that might not affect commodity items like groceries, it could cut into licensed goods that are typically a discretionary purchase.

Boston America, which markets licensed drinks and candy tins, increased pricing to distributors in late 2021. Moving forward, however, CEO Matthew Kavet said the company will tread carefully given that “as a novelty candy company, you could price yourself out of the market.”

Another complicating factor is that some retailers are struggling and seeking 120-day payment terms, a stark departure from the more typical 30-60 days.

“I do take our growth [this year] with a little bit of a grain of salt because we had to raise pricing,” said Matthew Hoffman, CEO at Uncanny Brands, which sells licensed plush under the Bleacher Creature brand and small kitchen appliances. “We were careful because if you raise prices too much, you will get resistance and those who might have bought three of something will buy two. If you get too aggressive on pricing it will impact sales, but it also depends on the category.”

The bottom line for all companies is to avoid a repeat of 2021, when shipping delays snarled goods at ports and holiday retail orders arrived in January, leading to an inventory buildup that has taken much of this year to work through. Indeed, many suppliers shipped product 2-3 months earlier this year to avoid potential logistics issues.

“Freight rates are still very high and there are quite a few additional charges that have been levied that we never had pre-pandemic and those are adding up,” Kavet said. “To get a box from China to California has gotten a lot cheaper, but [charges related to] the other elements of moving that box and landing it safety at your facility haven’t come down. As a result, we have dedicated all our financial resources to maintain in-stocks of inventory.”