How Can China Furniture Export Cope With The Lack Of Containers?
With the COVID-19 epidemic still spreading overseas, many overseas companies have been implementing “telecommuting” plans from home, snapping up furniture from China.
However, the order boom to the domestic furniture enterprises to bring “sweet trouble“. In the face of strong demand brought about by the shortage of containers, the industry chain of enterprises to respond to the strange tricks, including containerization, multi-purpose ships instead of container ships to transport goods, etc., racking their brains to ship as soon as possible.
China Furniture Export-Order intake exceeds expectations
In October this year, Microsoft first announced to the public that it would allow employees to continue working from home next year. In addition, several US internet companies have announced that employees can continue to work from home.
We learned from a number of furniture enterprises in Taizhou, Zhejiang Province, the home furnishing industry exports an unprecedented boom, many factory orders have been scheduled until after the year.
Industry insiders believe that the rise of the home office approach will give rise to a new office ecology, different ways of working, the need for different office facilities, office furniture to support. After the epidemic, many overseas offline shops closed down, but long-term home consumer demand for furniture has not abated, and gradually transfer the purchase demand to online.
Since the third quarter, China’s foreign exports have accelerated the recovery, many usually focus on the domestic market furniture enterprises, export orders are beyond expectations.
In “China’s furniture capital” Foshan and “chair industry hometown” of Zhejiang Anji, the whole industry chain ushered in a round of market, orders soaring, accessories in short supply. Furniture companies recruited to expand production, and overtime production and transportation. Foshan, a furniture enterprise data show that the export orders concentrated outbreak from August, its North American market orders increased by 100%, the European region increased by about 70%.
At the same time, the “home economy” has further given rise to an online shopping boom. Take Alibaba’s cross-border e-commerce company, SellingTone, for example, in September, sales of large furniture on the platform rose three times year-on-year, home office chairs in the European market sales rose 500%, sofa sales rose more than 200% year-on-year, large indoor lamps rose more than 50%, ultraviolet germicidal lamps increased by nearly 200% year-on-year, in short, Chinese furniture exports showed a substantial increase.
China Furniture Export-Take out the “locker” trick
However, the order surge, export enterprises are facing “sweet trouble”. The global epidemic has slowed down the flow of containers, resulting in a global supply chain crisis, and a shortage of containers in the country, even to the point of “one container is hard to find”.
Since June, foreign trade enterprises have become aware of the container shortage phenomenon, enterprises need to book containers in advance. Recently, the container shortage problem still has not been eased, exporters in advance booking time has been lengthened, from a week, 10 days has been stretched to 20 days, a month, and sometimes even need to shake the number to spell luck.
“At the moment there is no need to shake things up on the maritime side, and some of the newly opened rail transport routes do have shakedowns, for example to inland countries and regions such as Russia. The capacity of these newly opened routes is relatively tight.” said a business person from a freight forwarding company in Shanghai.
Data released by the Shanghai Shipping Exchange shows that the China Export Container Price Index soared from below 850 points in May all the way to 1,488.72 points on December 18, a record high in recent years.
Cross-border logistics costs are facing a rise. Data from the sea transport network shows that the container shipping price of the United States route continues to soar. From June, the United States West, the United States East route space began to be tight, the month-on-month increase of 28.4% and 20.9% respectively, compared with the beginning of this year doubled. Shanghai to the United States West Coast basic port of container freight reached the highest level in 8 years, a container to the United States West Coast route freight has surpassed 5,000 U.S. dollars.
Containers are in short supply, but delivery time cannot be delayed in the face of strong demand.For this reason, foreign trade enterprises racked their brains to come up with tricks to speed up shipments.
Some cross-border logistics platforms have introduced “consolidation” container services, where orders from multiple businesses are consolidated and sent overseas. The shipping company delivers to the port and then splits the goods into different locations according to the different needs of the customer, providing door-to-door transport services through third party logistics companies.
In addition, due to the high freight rates for container ships, some shipping companies have activated multi-purpose vessels to carry cargo instead of container ships.
China Furniture Export-Business profitability gets better
Since July, China’s furniture industry exports have begun to rebound signs. According to the China Furniture Association statistics, the first half of this year, the furniture industry was above the scale of 6,418 enterprises, the industry’s total exports of 24.077 billion U.S. dollars, down 11.98% year-on-year. From January to July, 6,457 enterprises were above the scale, the industry’s total exports of $29.941 billion, down 6.46% year-on-year. This means that in July a single month of furniture industry above-scale enterprises increased by 39, a single month of exports of 5.864 billion U.S. dollars.
The continued rebound in the furniture export industry has been reflected in the third quarterly results of the relevant listed companies. Xilinmen, which is mainly engaged in the sale of furniture products, reported a bright performance in the third quarter, achieving a net profit attributable to the mother company of US$2.17 million, an increase of 2.47% year-on-year and 42.21% sequentially. In particular, the furniture segment, which is the main business, achieved a net profit of US$2.17 million, up 28.96% year-on-year and 57.37% sequentially.
Zhejiang , zhongguo Yongqiang specializes in the production of outdoor leisure furniture, products are sold to the United States, Germany, Australia and other markets. The company’s net profit for the first three quarters was US$80 million, an increase of 35.50% year-on-year, as the “home economy” has led to a surge in demand for home garden and leisure products in overseas markets. For the full year, the company expects net profit of US$90 million to US$120 million, an increase of 20.00% to 49.99%.
The spread of the global epidemic has made international movement of people more difficult and orders from exporters who relied excessively on offline transactions were once pressed to pause, causing international trade to accelerate its migration to online.
As a leading manufacturer of office chairs in China, Henglin has vigorously promoted its cross-border e-commerce business, invested in the establishment of a cross-border e-commerce overseas operation company and built its own overseas storage and logistics base and cross-border e-commerce warehouse. The company achieved a turnover of US$280 million in the first half of the year, an increase of 51.1 per cent year-on-year.
Wind data shows that in the first three quarters of this year, Shenwan furniture industry operating income ranked first is the European furniture, 1.53 billion U.S. dollars, Gujia home in second place, at 1.35 billion U.S. dollars.
Home sector is a market concern, many brokerage institutions issued a strategy report bullish on investment opportunities in the home furnishing industry next year, and pointed out that demand continues to recover, the industry inflection point upward trend is clear. The next 1-2 years, the real estate market gradually rebounded, lifting the home furnishing market demand. In the long run, along with the economic recovery, consumer upgrading and other trends, industry growth will have support. In addition, the concentration of the industry has increased, and the head enterprises will gain more market opportunities.
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