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Wood furniture exporters have plenty of orders but face cost challenges

By Vien Thong   March 30, 2022 | 11:00 pm PT
Furniture companies have orders for until the end of Q3 but are facing surging production and transportation costs.

Duong Thi Minh Tue, business head of Binh Duong Province-based Minh Duong Furniture, said there are orders from the U.S. and Europe for until Q3, and the company is now taking orders for the final quarter.

Furnist, a smart furniture manufacturer with two factories, said order books are full until August, with 60 percent coming from the U.S.

Wood product exports are expected to increase by 8 percent this year to US$16.5 billion, Nguyen Chanh Phuong, vice chairman of the Handicraft and Wood Industry Association of HCMC (HAWA), said.

But he also spoke about the challenges that furniture makers are facing, with material, labor and transport costs being driven up by the impacts of Covid-19 and the Russia-Ukraine conflict.

Visitors at an exhibition during the Vietnam Furniture Matching Week in April last year. Photo courtesy of the Handicraft and Wood Industry Association of HCMC (HAWA)

Visitors at an exhibition during the Vietnam Furniture Matching Week in April last year. Photo courtesy of the Handicraft and Wood Industry Association of HCMC (HAWA)

"[30 percent] of inputs are imported from Europe, the U.S. and South America", he said, with global lumber prices hovering near all-time highs of US$1,000 for a board foot, he said.

Transportation costs have risen by 30 percent to $6,000-12,000 per container since the Ukraine crisis began.

One container of furniture only costs $10,000-15,000 free-on-board.

The high transport costs have made many importers hesitant about placing orders or postpone delivery after their orders are completed, industry insiders said.

Tue said the price of one chair has increased by $40 as it costs importers up to $25,000 to ship a container from HCMC to the U.S.’s east coast.

"Many consumers will find that unaffordable."

Tracy Tran, senior sourcing manager at American furniture retailer Mitchell Gold + Bob Williams, said Vietnamese furniture makers should come out with their own collections rather than make products on order since original designs cut production time by half to two or three months.

Saying the high-end segment offers Vietnamese businesses plenty of opportunities, she exhorted them to get a better understanding of customers’ needs and offer more choices.

 
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