May 19, 2022

Wooden Furniture Exporters Have Many Orders But Face Cost Issues

Duong Thi Minh Tue, business manager of Minh Duong Furniture, based in Binh Duong province, said there were orders from the United States and Europe until the third quarter, and the company is taking now orders for the last quarter.

Furnist, a smart furniture maker with two factories, said order books were full through August, with 60% coming from the United States.

Exports of wood products are expected to rise 8 percent this year to $16.5 billion, said Nguyen Chanh Phuong, vice president of HCMC Wood Crafts and Industry Association (HAWA ).

But he also spoke of the challenges faced by furniture makers, with material, labor and transport costs driven by the impacts of Covid-19 and the Russian-Ukrainian conflict.

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

“[30 percent] inputs are imported from Europe, the United States and South America,” he said, as global lumber prices hover near historic highs of US$1,000 per board foot, he said.

Transport costs have increased by 30% to $6,000 to $12,000 per container since the start of the Ukrainian crisis.

A container of furniture costs only $10,000 to $15,000 free on board.

High transportation costs have made many importers reluctant to place orders or postpone delivery once their orders have been completed, industry insiders said.

Tue said the price of a chair has increased by $40, as it costs importers up to $25,000 to ship a container of HCMV to the US East Coast.

“Many consumers will find this unaffordable.”

Tracy Tran, sourcing manager at US furniture retailer Mitchell Gold + Bob Williams, said Vietnamese furniture makers should offer their own collections rather than making products to order, as original designs cut down on production from half to two or three months.

Saying that the high-end segment offers many opportunities for Vietnamese companies, she urged them to better understand customer needs and provide more choices.