Furniture shipping rates now equal the cost of the furniture itself as lead times continue to stretch on for months

·2 min read
woman packing up apartment with boxes around her, holding smartphone
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  • The US imports roughly $23 billion in furniture each year, with two-thirds coming from Asia.

  • The average cost of a 40-foot shipping container has seen a five-fold increase over two years ago.

  • "Shipping rates are now equal to 100% of furniture prices," Flexport CEO tweeted.

Earlier this year, the estimated delivery time for a new couch could easily be three months or more.

Shoppers who decided to hold off on their purchase until that number improved are still waiting, as the Long Beach logjam has nearly crippled the US supply chain.

But now furniture buyers face another obstacle in addition to seemingly endless lead times: the cost of shipping the goods has skyrocketed.

"Shipping rates are now equal to 100% of furniture prices," Flexport CEO Ryan Petersen tweeted last week, saying that freight rates have risen beyond the level that companies could reasonably absorb.

To be sure, there are a lot of variables at play with respect to specific companies and their contracts, but that still means a lot of passing costs along to customers.

The US imports roughly $23 billion worth of furniture each year, according to a Furniture Today estimate based on government trade numbers, and more than two-thirds of that comes from Asian markets, namely Vietnam and China.

When shipping rates were low, it made sense to manufacture everything from mass-produced wooden bed frames to custom-upholstered couches in Vietnamese factories and send them across the Pacific.

But a mix of pandemic disruptions in Asia and roaring consumer demand in the US have contributed to a staggering five-fold increase in the average cost of a standard 40-foot shipping container. Drewry's World Container index, which tracks 40-foot container rates, is currently in the neighborhood of $10,000, compared with less than $2,000 two years ago.

Not only are containers more expensive than ever, Drewry's says global shipping schedule reliability is "at its lowest."

"Two-thirds of all goods trying to come into this country are coming in really late," furniture industry analyst Ray Allegrezza told the Wall Street Journal. "I've never seen anything this crazy-and it's not going to get better any time soon."

Some interior designers told the Journal they are increasingly sourcing from local manufacturers to complete projects, and one furniture craftsman told Insider earlier this year that he was seeing an increase in customers rehabbing and restoring older pieces.

On Tuesday, the CEO of a leading contract logistics company indicated that the worst of the supply chain crisis may be behind us, even if it could take a while longer to fully resolve.

As to when Allegrezza expects furniture delivery times to return to normal, "the pundits are saying maybe 2023," he said.

Are you waiting on a furniture order to arrive? Email Dominick to share your story.

Read the original article on Business Insider