The HF team will be at HD Expo in Las Vegas! Come see us! Book a meeting with us here.
Questions? Email us: hello@hotelfurniture.com
The Numbers Our Industry Cares About
- Global Container Average: $9.142
- China/East Asia to North America West Coast: $15,552
- China/East Asia to North America East Coast: $17,150
- Europe to North America East Coast: $8,382
The Lead Times Our Industry Cares About
- Case Goods: 16-24 weeks
- Soft Goods: 14-36 weeks
- Lighting: If not in stock, 16-18 weeks
- Window Treatment: 6-12 weeks after field measurements and fabric
- Carpet: 10-14 weeks
Shortage of Domestic Truckers
A consistent problem that still plagues the industry is the shortage of truckers around the country. At the beginning of 2022, we saw a shortage of 80,000 in the market. We are now at the beginning of May and seeing the same numbers. This is being felt by the entire market, and there is little companies can do to turn this tide. Driver wages are the highest they have ever been with packed benefits packages. Drivers are not seeing this as enough to bring them away from their new work-from-home jobs that may pay less but afford them more time to pursue other passions or spend more time with family. There isn’t a shortage of trucks; there is a shortage of truck drivers.
What can we continue to expect?
- Booking lead times lengthened
- Higher freight cost
- Missed pickups
Disruptions are expected to persist say Cleveland Fed
The problem with creating a perfect system is that it only takes one domino to fall and you get a cascading effect on the rest of the system.
It is no secret that the Manufacturing and Transportation sectors have been the worst and even the Fed is admitting that their initial forecast for recovery was off, and quite frankly, by a lot. Some out there were betting on the inflation train hoping that it would reduce demands in the markets and a slowdown would help fix some of the issues, but it doesn’t seem to be having that effect. Inflation is at all-time highs across the world and that has in no way tamed the public's need for the next gadget. With the Fed modestly raising rates, newer and newer projects are securing cheap money for projects in the hopes that inflation will eventually wipe out all that debt. It is smart on the side of the builders. Everyone believes the economy will eventually catch back up to inflation, and all these business owners taking advantage of cheap money to start projects, that won’t be complete for another 2-3 years, is a really good deal. Unfortunately, the supply chain doesn’t seem capable of keeping up with this model of business for the time being.
We Need To Talk About China
1/5 of the world's container ships are currently waiting to be loaded in China and with extreme covid rules still being enforced by the Chinese government, we could be seeing worse supply chain problems develop.
Shanghai has been in lockdown for almost 30 days. People are starting to run out of food and the government is struggling to improve this situation. There are already rumors out that Beijing is starting to see a spike in new covid cases. Until this new wave of covid subsides, I think we are going to be going into another rough couple of months before we get back to the levels we were seeing just before the beginning of April 2022.
Overall Supply Chain Outlook: Poor to Moderate
By now, we have continually seen issues with China and the global supply chain. For the most part, we have maintained some sort of order during all of this. Manufacturers still seem to be making products and customer orders keep showing up even if they are a little bit late.
What is different about this situation compared to the past two years is that too many ships are empty and waiting to be loaded. Before we had too many ships that couldn’t be unloaded. This is hugely due to extreme policies for covid mitigation. The pendulum will continue to swing back and forth until covid policies are tailored to the market and not the other way around. Only then can the world start focusing more on the supply chain issues across the globe.
Sources:
- https://www.forbes.com/sites/walterloeb/2022/04/24/how-the-supply-chain-crisis-is-being-solved/?sh=552e405d1db1
- https://www.maritime-executive.com/article/windward-fifth-of-world-s-containerships-are-stuck-in-port-congestion
- https://www.reuters.com/world/china/shanghai-reports-12-new-covid-deaths-frustrations-boil-over-2022-04-23/
- https://fortune.com/2022/04/23/china-lockdowns-inflation-supply-chain-nightmare-shanghai/
