Thinking inside and outside the box

“Beneath those stars is a universe of gliding monsters.” –Herman Melville

Since filing the first part of this series on the container revolution, supply chain issues have made the front page of the dead tree edition of the New York Times on three occasions. By this unofficial metric, challenges for the delivery of goods from factories abroad to stateside addresses have captured the attention of most everyone. Unfortunately, much like the officiating during games, logistics are working well when the general public never has to think about them.

The first mention on Jan. 5, described the mid- and long-term options for U.S. companies seeking to improve their supply chain resiliency, which is to say, what manufacturers and suppliers are doing to think way outside the (shipping) box. These options include on-shoring and re-shoring, or bringing production back to the U.S., as well as near-shoring, which means displacing offshore supply with sources in Mexico and Canada. Furniture companies are wisely looking at all of these options, and in combination.

Significant to me is Ashley’s recent announcement that it is acquiring Wilson Logistics’s West Coast truck fleet, pushing the company’s truck and container totals to, respectively, 2,000 and 5,000. 

“It is part of our plan to fix constraints in the supply chain, and trucking is a big part of that,” Todd Wanek, Ashley’s president and CEO, told Home News Now. “Transportation is such a constraint right now. We have been working on this for quite a while.”

I remember well the company’s hedge against supply chain issues in the late 1990s by investing in finishes for its Millennium line made in Arcadia, Wis., even while moving as aggressively as any U.S. concern into the Dongguan-Shenzhen region in China for furniture-by-the-pound values. Ashley is doing what Amazon is doing, which is moving to directly control more of its own supply chain rather than be subject to the vicissitudes of pandemic, hurricanes, typhoons, tornadoes, gas prices and labor unions. Or at least vulnerable to fewer of them.

This macro trend has the potential of re-shaping U.S. manufacturing writ large. Because of its small size relative to other industries, home furnishings won’t get as much front page attention, but this trend will change furniture manufacturing yet again.


General Motors announced last month that it is moving toward a $4 billion expansion of domestic production for electric vehicles and the batteries that power them. A few days later, Toyota announced similar plans, designating Liberty, N.C., just outside of Greensboro for a $1.3 billion battery plant. While it will be late in the decade before these facilities come online, they will invariably affect U.S. manufacturers’ decisions regarding on-shoring and re-shoring. 

As recently as 1997, U.S. factories employed as many as 17 million people, according to the Times’s coverage. By 2010, this total had reached a low of 11.5 million. Now, in early 2022, the number is only about 12.5 million, but it’s a total that is about to begin a steady rise.

Perhaps the poster child for on-shoring and, more generally, for improving supply chain resiliency is Tesla, the enigmatic, mercurial automaker that somehow nearly doubled sales last year in the midst of pandemic, a year that saw the big U.S. carmakers shut plants down during what was and remains a widespread computer chip shortage. 

I say, “poster child,” because the electric car company started less than 20 years ago.

Tesla’s secret? Simplifying its product, as the second New York Times article explains. Expect this seemingly obvious lesson to get renewed attention in furniture, as well. 

Because Tesla is as much a tech company as it is an automaker, predictably the company never outsourced the software that are the brains of its cars. They could switch out the computer chips they used, therefore, because they write their own code. This flexibility on the front end of the supply chain is comparable to Ashley’s and Amazon’s moves on the back end to better control logistics and resiliency.

Add coding and programming flexibility to what is, relative to virtually every other car lineup in the world, an elegantly simple product line: Model 3, Model S and Model Y sedans, and the Model X two-door version. That’s it. Chocolate or vanilla. Short, Tall or Grande. 

As an analyst of the semiconductor industry, IHS Market’s Phil Amsrud, told the Times, “Tesla has fewer boxes. The fewer the components you need right now, the better.” 

See, it’s all about the boxes.

Less is more

But making it simpler isn’t retrenchment, as Ashley’s strategic decisions also demonstrate. At the same time Tesla was simplifying its supply chain with respect to chips, it was doubling down on battery production, announcing plans for a gigafactory in Nevada to make battery boxes. Thus, onshoring + elegant simplicity = control and resiliency. 

Meanwhile, and shorter-term, Congress is moving to improve traffic on the sea lanes. While GM and Toyota were making their bold announcements, a bi-partisan group of House members (that’s not a mistake – bipartisan!) passed legislation to allow the Federal Maritime Commission to pressure the big shipping companies to prioritize deadheading, or the return of empty containers mostly to Asia. 

And don’t underestimate the power of even vague legislative action like that of last month. When Congress liberated interstate truckers in 1980 to carry virtually whatever they wanted anywhere in the country at whatever rates they could persuade customers were reasonable, trucks and, by extension, railcars no longer had to deadhead on return routes. The implications were staggering. Costs dropped, larger customers got discounts for volume prohibited under previous rate schemes, and contracts could cover end-to-end shipment, further lowering costs and increasing predictability. 

To return to our history of the shipping container, wonderfully told in Marc Levinson’s book, “The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger,” it’s remarkable from an industry standpoint that the big ocean-going shippers are mostly all latecomers to the party. The standard-sized container’s early adopters are all either gone or long-since acquired by more recent, now dominant shippers. 

The Maersk Line started up in 1973, Mediterranean Shipping in 1970 and Evergreen Marine in 1968, and none of them had containers in their fleets prior to 1973. Maersk has since acquired four other competitors, including Sea-Land, while Evergreen, founded by Taiwanese entrepreneur Chang Yung-fain, took on the big conferences to win market share. 

A massive shakeout 

In the last column, I noted that the container’s most important, most consistent advocate, North Carolina’s Malcom McLean, cashed out in 1977. But like Michael Jordan, Roger Clemens, and Sherlock Holmes, he couldn’t stay away. Coming out of retirement to jump back into the global shipping business with United States Lines, he promptly ordered 14 of the new super freighters from Korea’s Daewoo. 

By 1986, squeezed by all of the new competition, United States Lines’ holding company, McLean Industries, was forced to file what at the time was the largest corporate bankruptcy in U.S. history, carrying $1.2 billion in debt.

Similarly, the business of container ports saw big winners and spectacular losers, a Darwinian process that re-drew the global shipping map. Gone were Liverpool, London, Philadelphia and Baltimore, to name a few, at least in terms of handling a significant share of the world’s container traffic. In their place rose Hamburg, Haiphong (Vietnam), Chittagong (Bangladesh), Singapore and, of course, China.

Hong Kong handled all of China’s container traffic as recently as 2002. Just a dozen years later, seven of the world’s largest container ports were in mainland China, according to Levinson’s history, and not a single port in either Europe or the Western Hemisphere even made the list. 

On-shoring, re-shoring and near-shoring will re-draw this map yet again. How will your company position itself to take advantage? 

And what will happen to the humble container? Today’s vessels carry as much as 20,000 TEUs, which is roughly equivalent to the space needed to move 144 million bottles of wine, by Levinson’s calculations. That’s a lot of vino. The container isn’t going anywhere, which is to say it will continue to go everywhere – by ship, train and truck. I can drink to that.

Brian Carroll

Brian Carroll covered the international home furnishings industry for 15 years as a reporter, editor and photographer. He chairs the Department of Communication at Berry College in Northwest Georgia, where he has been a professor since 2003.

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