Date: Friday, December 2, 2022
Source: Furniture Today
HIGH POINT – While still well above pre-pandemic levels, ocean freight rates have come down significantly from their pandemic peak. Average spot rates hit $2,404 per container last week, a number 77% lower than the peak reached in Sept. 2021. That’s 36% lower than the five-year average, but still 82% higher than the average 2019 rates of $1,420.
Overseas supply disruptions have also eased, with many furniture suppliers facing far fewer difficulties than they once did.
But just as one issue gets better, another one has gotten worse.
Domestic freight has replaced ocean freight as the chief logistical hindrance for many suppliers, as fuel prices remain high.
“Inland freight is awful,” said Rusty Morris, vice president of sales and marketing at American Woodcrafters. “Pricing is ridiculous. Fuel and labor costs are up. It’s making it difficult to hit our strategy of expanding west of the Mississippi. The other thing that’s making it interesting is the shakeup of companies buying others, like Brooks Furniture buying Shelba Johnson. We have a lot of customers that use each. I don’t know how that’s going to work out.”
High-end importer Hekman Furniture also said inland is now worse than ocean.
“Trucking companies continue to have more power than we would like,” said Jim O’Keefe, the company’s vice president of sales. “I’m waiting for the pendulum to swing in our favor. It always seems like a conspiracy of factors: Driver shortage, diesel prices, etc. But I see a reduction in demand for consumer goods, which could lower demand for inland freight. Hopefully that will lead to better pricing, but we’re not seeing that yet, especially going to the upper Northwest.
Case goods importer Bernards Furniture said prices aren’t much of an issue, but delays are.
“There’s some difficulty in managing it, particularly with it getting stuck in hubs,” said Micah Swick, company president. “It’s taking longer to get product. Purely speculating, I think it’s a staffing issue. Everyone is working too hard and too thin. Employment remains a real challenge for everyone. Hopefully all these laid-off people will get absorbed into other workforces.”
Some domestic manufacturers see it as an issue as well.
“Logistics, mainly domestic trucking for me, is still expensive and transit times remain long,” said Gat Creek President Gat Caperton.
Vaughan-Bassett, one of the largest domestic bedroom furniture manufacturers, says inland freight isn’t too challenging in the eastern half of the U.S. but is tougher westward.
“We do 90% of our business in the Eastern time zone, and we don’t have many challenges there,” said Doug Bassett, president. “It’s a little challenging getting to the Western half of the country, particularly the Dakotas.”
Another domestic maker – high-end Sherrill Furniture – has largely avoided the issue thanks to its own dedicated trucking fleet.
“We haven’t really had any logistical or supply issues,” said Dax Allen, vice president of marketing. “That’s due to having our own trucking fleet, which we doubled the size of over the pandemic. We were able to open routes to the West Coast. We used to rely on third parties. Now we use our own trucks, and we’ve gone from doing business in 16 states to 40.”
Others acknowledge that it’s an issue, but are optimistic about it overall.
“We see pricing coming down for inland freight, which is sorely needed after the exorbitant prices we experienced during the pandemic,” said Jason Phillips, vice president of Phillips Collection. “Our big focus remains accountability with the bookings we have planned so we forecast our inventory as accurately as possible.”
Martin Furniture is also seeing fuel costs decline.
“With fuel prices receding, maybe land freight will be reduced,” said Gil Martin, company founder and CEO. “Fortunately, ocean freight has declined in cost dramatically. We wonder where that will balance out.”
Legends Furniture, both a domestic manufacturer and importer, is optimistic, despite challenges.
“We do still see some delays with ground (freight), but that seems to be getting a bit better as well,” said Tim Donk, vice president of sales. “As fuel costs continue to stabilize, we will begin to see the bright light at the end of the tunnel.”