Date: Wednesday, June 9th, 2021
Source: Furniture today
KUALA LUMPUR — A COVID-19-related shutdown in Malaysia, expected to last until the middle of June, could delay furniture shipments from that country for at least 30 days, if not longer in some cases.
The shutdown, which began June first and is expected to last until around June 15, is said to affect everything from the production to the shipping of finished goods from Malaysia.
It exacerbates an already challenging situation involving large order backlogs and shipments that have been held up due to challenges getting containers and getting those containers booked for shipment.
“As far as we can tell it is a pretty complete shutdown for a couple of weeks in Malaysia,” said Mike Wurster, president Elements International, which primarily imports bedroom and dining room from Malaysia. “They are trying to get the virus under control. Obviously that is meaningful from a factory (production) standpoint. … A pretty significant chunk of what we do comes out of Malaysia.”
Industry observers note that even if the shutdown is lifted by mid-June, it will take time for factories to resume production due to the complexity of restarting a plant. Depending on the factory, shipments could be delayed for another two weeks or more after production resumes.
“The issue is the fact that the factories are full, and the lead time is just a function of the open backlog,” Wurster noted. “Some people like us and some customers have done a better job forecasting things out and have managed it better by placing orders further out.”
Lifestyle Enterprise said it sources roughly half its case goods, including bedroom and dining out of Malaysia, including categories the country does well such as paper laminates and melamines.
“I worry about not getting shipments,” said company President Derrick Ng, adding that other countries such as Cambodia, Thailand and Indonesia aren’t producing the same type of goods coming out of Malaysia, making it difficult to switch source countries.
He said government officials are expected to meet June 14 to decide whether it is necessary to extend the shutdown even further.
Resources contacted by Furniture Today said they have communicated the situation to their customers. Despite the anticipated delays in shipments, many say that those customers have not been surprised due the current environment of backlog and container-related shipping delays.
As with changes in currency rates in any given country, Ng in particular noted, it affects everyone sourcing from that part of the world.
James Riddle, Lifestyle’s global chairman, said that he hopes that things are back to normal in Malaysia after mid-June.
“Needless to say, it is affecting our backlog,” Riddle said, noting that the delays are affecting everyone in a similar way. “We can’t ship. Our backlog is the highest it has ever been in the history of Lifestyle.”
In some ways, the shutdown could help ease the burden of finished goods piling up on factory floors, allowing goods to get booked on a container and be ready to ship out the door as soon as the shutdown is lifted.
“With the COVID scare and lack of containers, factories don’t have a choice but to shut down,” said Mike Bradshaw, president of Avalon Furniture, particularly as demand hasn’t significantly slowed in the U.S. market. “They don’t have anywhere to go with the goods. But everyone has had on their foot on the pedal.”