AUGUST 2021 Updates:
Our philosophy is to hold big inventories on both coasts to serve you as you need. Despite our full efforts to be in stock, our inventory levels are about half what they should be. Some facts:
We have more inventory in production than ever before, over $50 million at factory cost.
We have continued to keep record levels of containers on the water, currently 434 containers.
We have inventory sitting in factories that will fill another 285 more containers. These will ship as we find containers.
Normally we pay around $2,250 for a container to the West Coast, and $3,600 to the East Coast. We are now paying up to $18,000. We're expecting this cost to go slightly higher, with no relief for months. February '22 is when we expect rates to begin to improve significantly and capacity to be more available.
Shipping ports globally are strained to capacity, with backlogs at record levels.
Vietnam and Malaysia are effectively shut down due to covid, and one major port in China is partially shut down.
In the US, there is a significant shortage of available trucks and truck drivers, further delaying the movement of containers and product.
Internally, our performance has been challenged by the surge in business. At the same time, we're having covid restrictions and quarantines from time to time. Hiring is also more difficult than ever before.
I'm sharing these details to give a more complete picture of our challenges in serving you like we should. We will not be content until our inventory position and service level is back to where it should be. While the problems are global, please know that we've never tried harder to support your business.
Again, thank you for your business and your patience. I am sure your challenges are similar to ours, but I wanted to give a more complete update on where we are and why our performance is not what it should be.
We appreciate the opportunity you give us, and we will not take it for granted.
What we’re hearing from our Sales Reps…
“I appreciate your business, and patience at this time with manufacturing delays. I'm hoping to see a light at the end of this tunnel by fall. This has definitely been the most trying period of MY 30-year career in the furniture business.”
From our Manufacturers…
A heavy hitting weather system added insult to injury at the end of February …. The fallout from this latest weather event continues, with major impact being felt in many areas of the economy from grocery stores to gas pumps. Particularly hard hit was the Gulf Coast of Texas that… worsened existing foam shortages…
This letter is to inform you of some changes that are happening, and of some challenges we currently face regarding the supply chain, especially raw materials and transportation… the notion of it returning to pre-COVID levels has faded for now as many companies have backlogs that are pushing 18 to 35 weeks. We have heard reports of people booking orders out until 2022.
When we returned to work after the shutdown, we had to recruit our employees back to the lines… we campaigned to re-hire as many former (experienced) workers as possible, while also bringing fresh faces to the company… we are painfully aware that our delivery times are not up to the standards you have come to expect from us. Our primary goal is to improve every week so we can work our way back to our normal program.
Unfortunately, while demand continues to skyrocket, so do the costs of raw materials (plywood, steel, fiber, foam, and fabric), as well as for transportation both domestically and abroad. To illustrate the dramatic increase in material costs, since May 2020 our cost of plywood has increased 40%, foam increased 35%, and metal components such as recliner mechanisms increased 15%… these are just three of the components that have incurred price increases over the past few months. There are many more affected.
Sources: