Prior to 2016, many factors suggested a promising year for home furnishing retailers and manufacturers alike. E-commerce and domestic manufacturing were among those expected to drive business in the sector. Other variables included gentrification and household formation. To gain a better perspective of what actually impacted the industry during the first half of the year, here are some noteworthy events and news that surfaced.
Georgia Port Authority, the fourth busiest container port in the United States, received a $44 million grant from the US Department of Transportation. The funds were distributed through Nationally Significant Freight and Highway Projects, a program of the Fixing America’s Surface Transportation Act, which President Obama enacted on December 4, 2015, to support surface transportation infrastructure planning and investment. Overall, the act intends to streamline industry practices and resources in an effort to improve safety and efficiency. Georgia Port Authority will use the funds to increase rail capacity at the Port of Savannah, the largest single container terminal in North America and second busiest US container exporter. The project, known as the Port of Savannah International Multimodal Connector, is expected to alleviate congestion on highways by transporting more containers by train.
The Safety of Life at Sea regulation was amended to include a new rule regarding verified gross mass (VGM). The announcement, made prior to July 1st (when the rule began enforcement), requires all exporters to provide an accurate VGM for cargo they intend to ship. Failure to comply will prohibit port staff from loading containers onto ships for export. The person responsible for providing the information to the maritime carrier and terminal operator is the shipper named on an ocean bill of lading. In the event that a VGM does not reflect the actual capacity of the cargo, the shipment must remain at its location for the stakeholder to reclaim and have repacked at their expense. Penalties may also apply for misrepresenting the weight of cargo.
Another Store Opened
In May, Ashley Furniture HomeStore opened an 11th location in the state of Indiana. The opening marks Ashley’s 624th showroom worldwide. The 35,000-square-foot facility promotes a lifestyle element that creates a more inviting and inspiring shopping experience, according to the brand’s vice president of global visual. The showroom promotes 10 lifestyle displays, including contemporary, vintage casual, and “urbanology.” Products, ranging from furniture to accessories, outfit the spaces to give consumers a sense of what items can look like in their homes. The 11th store also features the Dream Destination mattress gallery, which promotes bedding from Simmons, Sealy, and Ashley Sleep.
Smith Leonard, the accounting and consulting firm overseeing the High Point Market account, reported at the end of June that furniture sales dropped by 3 percent. The decrease in sales occurred between April 2015 and the same month a year later, despite a minimal rise in September of 0.6 percent, according to the US Department of Commerce. The numbers reflected responses of market participants, who disclosed that their orders declined as well. A decrease in orders became evident in February. The industry did have one silver lining, however. Shipments were up just shy of 1 percent from the year prior.
Second Inland Port Planned
The South Carolina Ports Authority announced in April plans to open a second inland port facility. The new infrastructure would provide much-needed support to Inland Port Greer. While Inland Port Greer has performed with great success, the efficiency of rail transportation requires the highly used facility to have another intermodal infrastructure to handle growing cargo by rail. Still in the preliminary stages of discussion, port officials intend to have plans solidified by the end of 2016. One location considered for the new facility, Dillon, is located nearby Interstate 95, making it ideal due to its access to a CSX mainline that services the southeastern and Midwest markets. CSX leads in freight transportation as a rail service provider. Experts believe the opening of a Dillon inland port facility will lower shipping fees and boost employment in South Carolina. Further, the second facility will decrease traffic congestion and encourage economic development.
Furniture Today published an April article highlighting statistics regarding imports from the year prior. In 2015, furniture retailers purchased a majority of their overseas products from China. The country supplied 57 percent of total imports, which was nearly 12 percent more than the figures recorded in 2014. Other countries supporting the American home furnishings industry included Canada, Mexico, and Vietnam. The latter grew its exports to the United States by more than half a billion dollars in one year. Conversely, exports were significantly less for the United States, which grew exports by 1 percent, totaling $2.38 billion. The decrease in demand of American-made products came primarily from Saudi Arabia, Canada, and China.