by HIGH POINT — With workers set to walk off the job today at every major East and Gulf Coast port, home furnishings importers are scrambling to get market samples still in transit to their showrooms in time for market later this month.
In a recent statement, Joshua Bolten, CEO of Roundtable, an association of more than 200 CEOs of America’s leading companies, warned of the impact the strike could have on the economy.
“A port strike could cost the U.S. economy billions of dollars a day, hurting American businesses, workers and consumers across the country,” he said.
The impact of a strike was echoed by Oxford Economics, which has said a prolonged strike could impact as many as 100,000 jobs and impede U.S. economic activity by between $4.5 billion and $7.5 billion for every week it persists.
According to logistics and transportation experts, the strike could shut down about half of all goods shipped in and out of the country.
A recent report from CBS News said that, according to data supplied by ImportGenius, a firm that tracks bills of lading, “the digital receipts of cargo containers — a total of 54,456 20-foot equivalent units arrived on Friday at the 14 ports operating under the master contract between the International Longshoremen’s Association and the U.S. Maritime Alliance that expired at midnight Monday.
The approximate value of that freight was upward of $2.7 billion, based on an MDS Transmodal estimate of $50,000 per container. For the weekdays between Sept. 23-27, 273,417 TEUs were imputed through customs at these ports with a value of approximately $13.67 billion.
Home News Now contacted several industry observers who shared their opinions on how a strike might impact the industry.
While their opinions varied in terms of severity of impact, they all agreed that a strike could make an already challenged industry even more so.
According to Michael Amini, CEO and founder of AICO/Amini Innovation Corp., “An East Coast dock strike will certainly put more pressure on the West Coast ports, increasing traffic, delaying deliveries and driving up freight rates. With the holiday season around the corner, the congestion will be exacerbated even further. In an environment where we are trying to curb inflation, an extended strike will not help and could reignite inflation. Hopefully, it will not change the Feds rate-cut path, he said, adding, “In such a tough economy that our industry has been suffering, such a strike will only make it more challenging.”
Other home furnishings executives speaking with Home News Now also indicated that they hoped President Biden would step in, but the president has said that he would not do that and maintained that the ongoing dispute needs to be resolved through collective bargaining.
According to John DeFalco, senior executive vice president of sales and marketing for Primo International, a Canadian-based whole-home resource, “We can only hope that the current administration will intercede in some way and invoke a cooling-off period to allow product to flow through the end of the year. The industry is still facing headwinds, and this potential strike certainly will make things increasingly difficult for all of us.”
Commenting on the potential fallout from a strike, DeFalco added, “The potential strike has massive ramifications, across-the-board, obviously for the furniture industry, but for so many other industries as well.”
When asked about possible ramifications from the strike, DeFalco said, “For our industry, we are going to face increased costs, product shortages, increased stress on other North American ports and no doubt higher freight rates.
“The industry is still suffering from the recent outrageous increase of rates. These rates have mitigated somewhat; however, the port strike has the possibility of reversing the recent price decreases with the fourth quarter on our heels. Retailers need product to take them through the early part of next year, and no doubt this will create undue stress on the retailers and manufacturers, importers and distributors,” he observed.
John F. Pinion IV, an independent sales representative who represents leading importer Winners Only, said, “An East Coast port strike is a no-win for everyone. Winners Only primarily ships to the West Coast ports; however, a potential East Coast strike could be troublesome. Companies that mainly use the East Coast ports would reroute to alternative ports, creating more congestion and backlog in West Coast ports. Also, essential and perishable items tend to get first priority, so all furniture companies could face tremendous delays. A strike could also lead to price surges due to scarcity and increased transportation costs. Business is challenging enough with inflation and the election cycle; no one needs this right now.”
Many experts agree and worry that East Coast port closings could create short-term shortages of consumables and other products possibly resulting in higher prices for consumers already struggling to make ends meet.
A strike would reduce U.S. economic activity by between $4.5 billion and $7.5 billion for every week it continues, according to analysts at Oxford Economics. The investment research firm estimates it would take up to a month to clear the backlog of shipments that pile up while ports remain shut.
Tom Erdman, of HL Home Furnishings, said, “Based on the last strike on the West Coast, nothing got accomplished until the president got involved. My sense is it will be the same this time, especially in an election year. The timing is not good for anyone. I’m guessing most retailers have most of their Q4 inventory in the building. But, with Chinese New Year right behind, this could create a longer-term problem to unravel backups created by a strike of any duration. I am hoping this may be a short work stoppage. If it isn’t, look out,” he said.
Others, including Dennis Hoy, vice president of High-Point based Furniture Marketing Group, are taking more of a wait-and-see attitude.
“The possibility of a strike has been known for quite a while, and most dealers and importers have acted accordingly,” Hoy said.
“Some shipments have been rerouted through the West Coast, and there may be some delays in getting containers to the eastern half of the country. Industry insiders seem to have a wide range of expectations regarding how long the strike will last. Reports are that the sides are far apart and barely speaking. Most observers seem to believe this may be more than a strike of a few days. Our retailers are watching closely but do not seem terribly alarmed at this time,” he concluded.
Importers with multiple distribution centers here in the U.S., such as Coaster, are shifting their distribution activity as they carefully watch the situation.
According to Crystal Nguyen, Coaster’s vice president of merchandising and product strategic planning, “Since we have a large distribution center on the West Coast, we have steered away from shipping direct containers to our Florida and New Jersey branches until we see what happens with this dock strike.”
In the meantime, Nguyen said the company is using land freight to get product to its New Jersey and Florida warehouses. But to do that, the company is also incurring associated costs to make sure Coaster’s East Coast customers are taken care of and getting their orders fulfilled.
Nguyen also said that ocean transit time from Asia to the East Coast (versus the West Coast) will be about the same, “with possibly one week extra for us to receive goods at our distribution center in California and ship to Florida and New Jersey,” she confirmed.
Nguyen, as did others interviewed, said she hopes that if there is a strike, that it can be resolved quickly to avoid overall negative impact on the economy.
Samantha Simonton, owner of a fractional e-commerce agency specializing in the furniture and home product industry, shared this observation: “Online furniture sales thrive on a delicate balance of factors: the right price, high quality, engaging content and a steady, consistent inventory. A port strike disrupts this balance in two critical ways. First, inconsistent inventory can cause products on marketplaces to lose their organic rankings, pushing them off the first page of searches. This leads to a drop in sales and higher costs to regain that marketplace position.
“Second, increased container costs, holding fees and advertising expenses will inevitably raise the price for consumers. Ultimately, the consumer bears the brunt of the strike’s impact, as these costs trickle down to them,” she said.
