Ocean shipping rates likely to rise this spring
By Thomas Russell -- Furniture Today, February 1, 2004
HIGH POINT — Furniture importers are gearing up for a possible increase in ocean shipping rates this spring that could add about $300 to each container brought into the United States.
Importers and industry officials say shippers are looking for a General Rate Increase averaging about 10%, although that figure isn't set in stone.
A group of major carriers participate in a panel called the Transpacific Globalization Agreement, which discusses such issues as rate structures but doesn't set rates. Based on those discussions, individual carriers decide whether they will change their rates or not.
Any rate increase this year likely would take effect May 1, and would fall on top of an estimated 20% to 25% increase in 2003, which added between $700 and $900 in shipping costs per container.
To avoid the full, sudden impact of such hikes, importers usually negotiate shipping costs in advance.
"That allows for a minimal effect because you plan for it," said Jack DeBonis, chief executive officer of Global Furniture Inds.
"I think most importers are at a point where we try to prepare ourselves for these seasonal increases," said Michael Mazin, president of Canadian case goods importer Mazin Furniture Inds. "We are now trying to buffer ourselves so it doesn't devastate us as it has over the past couple of years. If you are prepared for something, you should be able to deal with it."
At Magnussen Home Furnishings, another Canadian-based importer, officials said shipping cost increases last year cut into some of the cost savings they pass along to customers. If there is an increase this year, the company hopes to achieve savings in other areas instead of passing higher costs on to dealers.
At Casa Bique, President R. Allen Douglas said continued increases in shipping costs obviously would raise the price of goods from overseas. But he believes his company's ability to negotiate prices with offshore manufacturers will keep its goods at competitive prices.
"While we are in the high end of the market, we have been very successful in bringing that look to the market at competitive prices," Douglas said.
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