18 June 2010
Furniture prices heading upward – Industry is blaming increases in labor and shipping costs
Furniture companies are raising prices despite fears that higher costs could kill off a rebound just as recession-shocked shoppers appear willing to spend.
Furniture makers are blaming higher labor and material costs for producing in Asia as well as trans-Pacific shipping fees. Industry insiders expect more news of price hikes after buyers and producers gather in High Point for the world’s biggest furniture trade fair, which began Saturday.
“I’m aware of a lot of manufacturers that are considering price increases in this upcoming April market. They will announce a price increase and they will see if their major retailers are willing to take it, and if not they’ll back off,” said Bob George, president of Atlanta-based Impact Consulting Services Inc., which advises furniture manufacturers and retailers.
One big factor driving furniture prices is the rising cost of shipping from Asia to the United States.
Last month, the Federal Maritime Commission, whose mission includes protecting U.S. maritime commerce from unfair foreign trade practices, started investigating whether a surge in shipping fees could strangle the budding U.S. economic recovery. The average price of shipping a standard 40-foot container from Hong Kong to Los Angeles, for example, jumped 61 percent in the first week of April compared with the same time last year, according to data from London-based Drewry Shipping Consultants.
Another culprit is that more than two-thirds of the wood pieces sold in the U.S. are made abroad, and rising living standards in China and Vietnam are bidding up factory wages, said Rob Sligh, chairman of Sligh Furniture.