The state of the Woodworking Market.....a supplier perspective.

[Rob Lee]

Hi All –

There has been some discussion here, and on other boards, about back-orders, price increases, shipping delays, and other market disruptions. I thought it would be worth sharing some of the information that we share internally with managers and staff.

Shipping issues:

·        Between port congestion and container shortages, supply networks are reaching a crisis point.
·        Inbound volume to North America has overwhelmed ports, dwell times continue to rise.
·        Hundreds of thousands of containers are sitting in the water off North American Ports waiting to unload.
·        Vessel space back to Asia is being prioritized with full containers, delaying the return of empty containers.
·        Container availability in Asia expected to decline sharply in April, leading to rate surges.
·        Japan has a massive shortage and is no longer accepting any bookings for new shipments until after May.
·        North American sales demand is 109% of available inventories, fueling a continuous re-order process choking out an already strained network.
·        North American rail terminals are experiencing 30%+ increases in volume.
·        Suppliers are warning of longer turnaround times for orders.
 
A really good video produced by the WSJ about shipping can be found here..

https://youtu.be/NgIZbRg1vOc

Keep in mind too that there are lots of raw material, components, production equipment, and replacement parts trapped in those containers as well. That will have ripple effects too – adding to the overall delay.
This uncertainty continues to build in our markets.

You've all seen what's gone on with the price of lumber. Costs are continuing to climb. Reasonable shipping rates for products might run in the range of 2-10% of product cost for most woodworking product. Shipping rates today are more than 4 times what they were one short year ago. That means costs have increased by 8-40% or more on replacement inventory, and those costs will be passed on somehow. (and …. just wait until the various Governments find a way to re-coup pandemic deficit spending….).

In short – supply will continue to be spotty, there will be substantial cost pressure on what goods are available, and there is still the looming possibility of Government tax increases and user fees.  

All part of the “new normal”.
 
Cheers (kinda),
 
Rob

[Bill Holt]

Rob, thank you for a somewhat simple explanation to a very complicated situation.

I'm a "the glass is half full" find of guy, but there is no telling how bad the taxing is going to get!!!!!!!!!!!!!

[Admiral]

Rob: This is consistent with the internal advice I've seen in my company, a telecommunications multinational, perhaps even more reliant upon offshore production due to outsourcing. Perhaps even more impact as we rely more heavily upon silicon (e.g., integrated circuit chips) which is having its own production issues. Internal projections see no significant relief until first or second quarter of 2022, and even then it may still be problematic. As you commented earlier, not fun being a manufacturer, especially in your case where demand is running high.

[Greg Jones]

Thanks Robin, I appreciate your sharing of the challenges that are facing your, and similar businesses, and how this affects us all. Cheers!

[Handplanesandmore]

Though not the motive or intention of Rob's message, the take away is that buy NOW if you can or if you need/want something that's still available. I've been spending 60% more in the past 10 - 12 months than the average past. Some of the items I bought in the fall are no longer available.

Baltic ply was out at several places here....and I had to settle for the cheaper ply, and it warped on me within a week in my shop!
I also had a hard time finding the T track I needed for a job from Amazon, Lee Valley, Rockler, etc., and eventually had to use the one from another jig in the interim. I had never thought that T tracks would be an item in short supply.

I'm prepared to maintain or exceed the 60% above average spending this year and next......I don't think the "normal" as we knew it would be back anytime soon.

Simon

[MG14]

“It’s only temporary.”

-James Taggart

[Handplanesandmore]

Last April or May when work started to disappear, I though it was temporary too. Now the pandemic anniversary is here.

Simon

[enjuneer]

I recently spoke with the foundry I work with as I want to make more parts for the Hamler Scraper Inserts. I was told that they are so busy fulfilling orders that it would be six months before I could expect components to ship. There goes my plans for the summer.

[mdhills]

Rob, thanks for sharing this perspective.

On a related topic, WSJ also did a short clip on lumber supply chain:
https://www.youtube.com/watch?v=m_5MkGbXXKc

Matt

[Handplanesandmore]

Six months....Hmm. Some electrical parts manufactured in Mexico (only) have been missing since last fall.....they're supposed to be back on the production line, and back on the shelf this month. None so far. The upgrade that was planned to be completed before Christmas has been put on hold....temporarily.

Simon