(Click here to read the first two installments we posted about the furniture supply chain issues affecting our industry since the beginning of the Covid-19 pandemic crisis.)
Asia in Duress
“Asia’s supply chain is under duress in a very significant way. We are really at a difficult moment,” according to the CEO of the largest furniture manufacturer in North America. And it is not just the shipping issue.
The long finishing lines for wood are also a problem. A finishing line may have 200 – 250 people on it and finding the people to run the line in addition to keeping them socially distanced is the issue. Anything with wood veneer and finish is constrained, and he suggests retailers plan for four to six months delays in dining room furniture and at least six months for wooden bedroom furniture. Anything with a wood veneer or finish will be difficult.
Plan for 4-6 months delays in dining room furniture and at least 6 months for wooden bedroom furniture. Anything with a wood veneer or finish will be difficult.
When Vietnam shut down in late July and early August, the government order prevented anyone from being out on the streets, even needing a permit to go to the grocery store, and the military was on the street enforcing this. Factories could only be open if workers lived on-premise. This manufacturer put up tents inside their facilities and 5,000 workers are still living in them. They vaccinated these people but haven’t been able to do the same for the ones sent home. Vietnam has now opened back up, and by February 2022, they believe they will probably approach 70% – 80% normal.
Vietnam expected to approach 70-80% normal by February 2022
Finding labor is the challenge, as it is in many places. Barring another lockdown, these workers could start returning by the beginning of 2022, but that is not certain. Then the factories must ramp up their capacity.
The U.S. West coast transport and container issues are still a mess. For instance, it takes three cranes to unload a ship a day. With only one crane operating without enough labor, it takes three days to unload one ship. It is said that it may be 2023 before this situation gets better. Trucking and railing are also in need of labor and can’t hire enough truckers. And I have heard recently that new California law prohibits trucks with engines made before 2011 from entering the area.
Some new manufacturing plants have been added in the US, and domestic upholstery and case goods production is ramping up. So, we can expect more onshore, localized manufacturing with expansion into Mexico and Canada.
There is some not so encouraging news from the good news last reported about the LA port operating 24/7. This operating environment has not worked that well because receivers weren’t ready to receive goods overnight. Some terminals may stay open late, but as of yet, it has not been a successful long-term solution. Maybe the hours will be adjusted in the future for receiving also.
Expect more onshore, localized manufacturing with expansion into mexico and canada
Good news, though, is a recent report that the NY and New Jersey port, third largest in the country, is functioning smoothly with no more than one or two ships waiting over the past few months, where LA currently has 77 anchored off Long Beach. Longshoremen labor rules in NY require crews to work around the clock, until the vessel is unloaded, and the port has also invested in faster gate technology. Another problem in LA is many importers are leaving empty containers there because they are allowed to do so. LA is about to start massive fines for leaving containers sitting around for more than nine days, starting November 15. These fees will escalate every day, so within a month it will be thousands of dollars per fine per container, which ocean carriers will turn around and place on importers.
To quote from an authority in the business, “NY is performing pretty well, LA is a complete mess, Charleston is doing better, Pacific Northwest is not doing well.” On a good note, rates are not as high as they were a few months ago. But it is predicted to be a couple of years before rates go back to pre-Covid times. They say that when the logjam breaks in LA or Savannah, it will unleash capacity into the market, and rates will come down. So, let’s pay attention to the number of ships waiting outside Long Beach, and that will show when things will improve. We are told that may be our signal. But I think there are other corrective measures beginning, like more onshore sourcing mentioned before, that will also play into the adjusting and improving the furniture supply chain, in addition to all other goods. So, stay tuned for the next chapter!