USA
Last year — amid port backups, container shortages and other supply chain nightmares — retailers and brands turned to the skies, sending demand for air cargo in 2021 up nearly 7% compared to 2019 by one estimate.
Shipping shirts and shoes, or Beanie Babies, by airplane has been an expensive but plausible workaround for many facing shipping bottle necks. Shipping couches or dining room sets by air — not so much.
Being larger, heavier, harder to move, more complex and crafted, and with manufacturing often geographically clustered, furniture and other home furnishings present a unique array of supply chain challenges even in normal times. The pandemic exacerbated all of them and created a host of new challenges.
Pressure and backups have moved through the supply chains along with the goods they were built for. “First, it was manufacturers, then it was inputs, getting the cloth and the springs and the leather,” Overstock.com CEO Jonathan Johnson said in an interview. “Then it was Asian ports, then it was U.S. ports.”
The industry is still working through backups and backlogs, though retailers have adapted, in part by simply accepting uncertainty and ocean shipping delays as a fact of life for the moment.
“It’s pretty much normalized to something that’s inconsistent, which means everyone just has to build a little more time into their supply chain,” Rick Jordon, senior managing director with FTI Consulting, said in an interview.
Williams-Sonoma Inc. CEO Laura Alber told analysts as much in March about the global supply chain challenges for the sector. ”[O]ur perspective is that this year is going to be about the same as last year, and we thought nothing could be worse than last year,” Alber said.
A ‘perfect storm’
Jordon said that the biggest challenges for the furniture supply chain right now are unpredictability in ocean shipping and pain at the ports. “That’s been the biggest pain point for a while,” Jordon said. “A 20-day transit would be somewhere around 65 days, then it’s 35. And then it’s back to 80.”
As outlined by Andrew Csicsila, a managing director in AlixPartners’ consumer products practice, last year saw a spike in demand for home goods as consumers refurnished their homes while container shortages and “chokeholds” at ports in Asia and then in the U.S. led to the widespread delays.
Price spikes for commodities that feed into furniture materials, including oil and lumber, have exacerbated the financial pain along with freight inflation. At La-Z-Boy, CEO Melinda Whittington told analysts that shortages of component parts such as microchips and actuators disrupted the company’s manufacturing operations for higher-end products.
(cfodive.com)
