Ashley adds surcharge on all products, citing ‘significant’ shipping challenges

ARCADIA, Wis. – Citing significant challenges in the global shipping market, furniture giant Ashley has increased prices for dealers on all products.

“The disruptions in the market have had a notable impact on shipping capacities and have contributed to significant cost increases across various areas,” wrote John Mask, senior vice president of strategic sales, in a letter to dealers. “Ocean freight, labor costs, vendor finished goods, vendor components and raw material prices have all been impacted.”

The company cited four of the most impactful disruptions:

  • A surge in demand, partly driven by a shortage of capacity, is creating panic
  • Major ports, including Singapore, are experiencing severe backlogs due to congestion
  • Impact of the Suez Canal disruptions
  • Average vessel speed is currently at its lowest recorded level

“In response to these challenges, we have engaged with our container suppliers, and have secured the necessary container volume to continue moving our freight,” Mask said. “Securing these containers has come at a higher cost than we anticipated during our product costing process.”

Domestic case goods and bedding will increase by 1%, while all other products will see a 3% increase. Price changes on new orders go into effect July 15. All open orders will be repriced July 29.

“When container freight costs stabilize, we will reassess our pricing,” he said.

Ashley is the second major importer to confirm to Furniture Today that it will add a surcharge. Flexsteel is the other, having implemented one June 19.

“We’re having real issues getting capacity at contracted rates and we’re forced to move to open market rates to ensure continued flow of goods and strong service levels for our customers,” Vice President of Sales David Crimmins told Furniture Today.

Spot rates have now surged more than 60% in seven weeks. Average rates from Shanghai to Los Angeles sit at $6,441, while Shanghai to New York averages at $7,552.

There is no indication of rates coming down any time soon. See here for more details.

See also:

  • A COVID redux? Furniture importers sound alarm on rising container rates
  • Why are ocean container rates rising? Taking a closer look

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