HIGH POINT — While COVID-19 is putting much retail business on hold, with 14 states instituting some form of “shelter at home” restrictions as of this writing, furniture vendors and carriers are positioning themselves to accommodate a rebound when the crisis eases.
Vendors were strained to keep up with demand before COVID-19’s full impact came stateside since the virus had already forced delays in resumption of production in Asia after Chinese New Year, as well as affecting component and raw material flow to domestic manufacturers. Meanwhile, furniture carriers’ hours-of-service restrictions and a driver shortage affected their service capacity.
The bottom line: Low demand creates some breathing room on both fronts to prepare for a rush of business as conditions improve.
To get a sense of product flow trends, Furniture Today reached out to Richard Tucker, national sales manager at specialized furniture carrier Shelba Johnson Trucking and chairman of the Specialized Furniture Carriers division of the American Home Furnishings Alliance; and Stone & Leigh COO Steve Wolfe, who also serves as president of Furniture Shippers Assn., which comprises logistics and transportation executives on the vendor side of the industry.
Tucker pointed out that the Federal Motor Carrier Safety Administration deems warehousing and transportation key functions in the COVID-19 era. He said specialized carriers continue to support retailers through the crisis and are adapting operations to accommodate stores that have been forced to close. Carriers will operate as long as shippers have product to ship and retailers are receiving goods.
“All our carriers are delivering to those retail stores that are open, and retailers are sometimes coming back in to meet deliveries when they’re closed,” he said. “We’re calling every appointment before delivery to make sure they’re available,” adding that back office and warehouses are sometimes open even if the showrooms are closed.
A lot of retailers had to delay scheduled deliveries, and Tucker said in those cases carriers are storing freight until such time as the stores re-open.
“We realize our customer base has to stay in business through this tough time, and we’re doing whatever we can to accommodate them until things settle down,” Tucker said. “Our No. 1 concern is the health of employees, and we’re practicing all the CDC-recommended steps about social distancing and gatherings.”
Business is obviously slow right now, but furniture carriers are looking to be ready for the eventual rebound.
“We know there’s going to be a shortage of business for a while, but we’re staying prepared and staying ahead of it,” Tucker said. “We want to keep the pipeline full and product flowing as best we can.”
Vendors’ perspective
Manufacturing capacity is heading back to pre-CNY levels even in China, and on the import front, slow U.S. retail is providing breathing room to stock up for a rebound in business after the crisis eases.
Wolfe at Furniture Shippers Assn. had thoughts on how the flow of incoming goods holding up for importers and how that could play out in the next couple of months.
“The production import flow is gradually moving back to normal levels from China specifically but is still at about 75% of what it was prior to the shutdowns there,” Wolfe said, noting that COVID-19 added to product-flow disruption resulting from a rapid shift of capacity from China in the wake of tariffs, and that shutdowns in key furniture hubs such as Guangdong weren’t as long as in Wuhan province.
“We have yet to see the full effect of what may happen among the Southeast Asia countries, but the manufacturers can’t be shortsighted due to the transit length of the supply chain.”
Blank sailings among ocean carriers, which are adjusted weekly, are a potential snag, but weak retail conditions stateside provide shippers with time to catch up.
Ocean carriers are “at about 75% capacity of their fleets due to this, all in an effort to maintain supply and demand rate levels that are advantageous to them,” Wolfe said. “This means manufacturers may not get on a vessel when the cargo is ready or pay a premium to get on that specific sailing string. Manufacturers may or may not want to do that based on how prolonged conditions remain depressed here.”
How about stateside?
A number of domestic manufacturers have suspended or seriously curtailed operations due to COVID-19. What’s the availability of goods to ship from domestic manufacturers and warehouse programs among importers?
“It appears as of right now that domestic inventories with the manufacturers are at good levels,” Wolfe said, noting that low-demand helps offset the impact of domestic production slowdowns, and that importers’ inventories always increase prior to CNY. “What we’re seeing this year is a drop off in orders currently from the retail channels due to the virus and many retailers asking manufacturers to hold orders already in house, and in some cases asking for orders that have shipped but not yet delivered to be held by the transportation carriers.”
That’s led to adequate inventories “by accident,” which will help when a return to more normal business conditions causes a spike in demand for shipments.
“Couple this by the reduction of shipments from overseas suppliers due to supply chain issues and the current soft demand, and the result is a neutral effect currently,” Wolfe said. “The word of the day, however, is ‘fluid,’ and we’re seeing changes daily.”
This volatility means supply chain and purchasing executives need to be ready to react whichever way the needle points.
“I would also say that every time we encounter something like this, the discussion always arises regarding ‘near-sourcing’ or moving the supply chain closer to the demand, with thoughts of Mexico, Canada, and returning as much production back to the U.S. as fiscally possible,” Wolfe said.
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