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What's going on in the furniture industry?

 

An unforeseen situation with unprecedented consequences

 

Although my interest is in furniture, everything below applies to all industries that imports goods by container. I have been exporting and importing furniture for over 50 years, but nothing has prepared me for the current situation. I used to be able to order goods from a factory and be given a date for them to be made. We could then book a container with a 99% certainty for when it would arrive at a UK port, and then arrange onward delivery to us on a set day. This meant we could tell our customers when their goods would be here and arrange collection or delivery to them.

 

Some of the most important changes to take into account

 

1 - Manufacturers are unable to accurately predict their factories' output

China, and to a slightly lesser extent Vietnam, operate a zero tolerance policy for COVID-19. A few people contracted COVID-19 in a town of over 20,000, where one of our factories operates and the factory was made to close for seven weeks. Supply of materials has also been affected by shipping problems. For example, most of the oak used is grown on plantations in the USA. This is affected by the shipping problems already described. Energy supply problems mean that most factories are only working at 40% capacity. As they have problems shipping goods out, factories are full of finished goods which they are still awaiting payment on, causing inevitable cashflow issues.

2 - There's a major shortage of empty containers to pack in south east Asia

The Suez crisis has meant that there is a large backlog of container ships trying to enter European ports. The ports filled up with full containers that they struggled to get delivered and so stopped accepting empty containers. This meant they could not be returned to be refilled.

3 - Widespread cancellations of many ships and lines causing booking issues

The shortage of ships meant that even containers that were already booked had their booking cancelled if the Shipping Line could sell the space at a higher price to someone shipping much higher value goods.

4 - Port closures in south east Asia due to lockdowns in China and Vietnam

Due to the zero tolerance policy on COVID-19 in several countries in south east Asia, ports are being closed with little or no notice, and therefore ships are being cancelled all the time.

5 - Delays to ships docking in European ports due to backlogs of containers

It is estimated that there are six million container units on ships at sea waiting to enter ports to offload. This has the knock on effect of delaying the entire process as ships are not returning as quickly as was expected. To try to offload quicker, ships are changing their routes or offloading at different ports. This makes it impossible to know when or where the ship will offload, or for the importer to plan the delivery. This situation has been ongoing for months.

6 - Maersk and Evergreen shipping lines halting their deliveries to UK ports

Unfortunately, the main UK ports, Felixstowe and Southampton, have been some of the worst affected in Europe. This has resulted in shipping lines reducing their sailings to England, and in the case of two of the largest shipping lines, stopping UK deliveries completely. These UK bound goods are being delivered mainly to Antwerp which now has a four-week backlog due to the shortage of small feeder vessels to transfer the containers to a UK port.

7 - The HGV driver crisis disrupting reliable deliveries from ports to outlets

The fact that the UK is short of 100,000 HGV drivers is well known, as well as the fact that supermarkets are paying drivers very high wages to join them. Currently, it is taking between 3 and 17 days to get a container delivered from the port to us or any of our other suppliers. This is also subject to change multiple times before we actually receive these deliveries as it so vague of an estimate that they give that they are streamlining their processes which are causing delays sporadically

8 - Suppliers' staff shortages due to increased demand in the haulage sector

As I said at the start, what I have written applies to anyone bringing in goods by container and this includes other UK wholesalers from whom we purchase goods. They, like us, cannot guarantee the date that they will receive goods, and so supply them to us. We cannot blame them for changes of date caused by a Government's COVID-19 policy, the actions of shipping lines or the operations of ports. All these things are way outside their influence.

9 - Delays in arrival of goods causing bottlenecks for our own deliveries team

We are currently booking and making a lot of deliveries to customers. We must face the fact that there could be changes in the timings of these if staff contract COVID-19 or have been in close contact with someone who has. We do not want to send someone into a customer's house who has COVID-19.

 

Contributing factors to consider

 

"Although we bring in our own containers, we also purchase from UK wholesalers. These wholesalers have exclusivity arrangements with the factories, so the retailers are reliant on the wholesaler's stock. If you've been waiting some time for your goods, it means that you are already high up in the queue to receive them. Going to another retailer means that the process will start again and you will be at the bottom of the queue. If any retailer quotes you a quicker delivery than ourselves, please make sure you check that they have the physical stock in their warehouse. If this is not the case, they will not be able to supply the furniture any quicker. Our systems insure that we place orders with suppliers within 24 hours of receiving them from customers."

 

Should I cancel my order now and reorder when things get better?

 

There are two factors to take into consideration when deciding whether to cancel and start afresh.

Firstly, will it be better or worse when you reorder? I don't believe that things will get back to the old normal, as described at the beginning, until July 2023. There is simply too much strain on the system at present and it is not likely to start to improve this year.

Secondly, shipping costs have increased in the last 13 months from $1,500 to $16,000 per container - over 10 times as much. Wholesalers and retailers did not dare to put this price increase onto items in one go, and so there have been continuous and ongoing rises in prices to compensate for these losses. It is worth checking how much your furniture would cost now compared to when you bought it. You might be surprised how much more it will cost.

 
 

Links

 

Here are just two links to the huge number of articles about furniture supply problems.


Supply chain crisis could last another two years. Guardian 18th December 2021

http://www.theguardian.com/business/2021/dec/18/global-supply-chain-crisis-could-last-another-two-years-warn-experts


The Great Furniture Delay. Guardian 11th December 2021

http://www.theguardian.com/business/2021/dec/11/the-great-furniture-delay-we'll-be-eating-christmas-dinner-on-our-camping-tables

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