Containers are transferred from a truck to cargo ship at the international cargo terminal of a port in Hai Phong city on August 12, 2019.
Furniture rental company Cort is jumping through hoops to manage supply-chain delays and a sharp rise in shipping costs it began facing last year as the coronavirus pandemic gripped the world.
To avoid the difficulty in finding available shipping containers to lease, it bought 100 so it could get its couches, beds and bar stools to the United States. The company imports from seven countries, but it is adding even more, including Mexico, and sourcing more products domestically.
To bypass the traffic buildup at the Port of Los Angeles, Cort has turned to other ports to bring in its desks, office chairs and book cases.
“In my time in business, I’ve never seen anything that resembled it. Typically, if there’s part of the supply chain that has an issue, it’s in one part of the supply chain. Here we’re seeing literally across the board over the last couple of months,” said Cort Executive Vice President Mark Koepsell.
Products that took 30 to 45 days to receive, now take seven to eight months, Koepsell said.
“Issues are everything from finding space on a ship coming out of Asia, to getting the ship across the sea and through the Port of Los Angeles, which is stacked up anywhere between seven and 14 days deep with freighters going down the coast,” Koepsell said.
Cort, owned by Berkshire Hathaway, usually has hundreds of millions of dollars worth of furniture in storage at any given time. Furniture for its busy season normally arrives by late March to early April.
“We buy on a regular cycle every year that tends to coincide with, at least on the residential side, deliveries that will support the relocation season. And that season generally starts in March and goes through September, October,” Koepsell said.
This year, it barely had any of its 170 containers delivered by April.
“In terms of trying to get a container on board, it took both more time and it took a lot more money than what it has in the past,” Koepsell said. “At the beginning of June, we had 20 of them in. [By the end of July, we] got probably north of 100 in and we’re expecting all of them to be in by the end of August.”
Unlike a furniture retailer, Cort services people who are relocating domestically and deciding to not take all their belongings with them, or those who are moving internationally and temporarily need furnishing for a set time frame or until their belongings arrive. Cort works with corporations, relocation management companies and at the individual level.
Cort would not reveal its annual revenue, but the industry had $5.8 billion in sales in 2019, according to Kentley Insights’ 2021 Party and Furniture Rental Market Research Report.
The company keeps its furniture in use for a few years before selling it at its clearance centers or to groups involved in supportive housing projects.
Koepsell oversees the company’s work with relocation management companies domestically and around the world and the company’s higher education and military service businesses.
With delays in many peoples’ plans to relocate, Cort was lucky that its busy season coincided with people’s moving plans.
While many people moved last year, especially young professionals, according to Cort, corporate-sponsored relocations declined by 40% to 60% in 2020, with the largest drops in international relocations. That business is just beginning to pick up again.
“What typically would have happened in March, April or May has been pushed back. And so the furniture is arriving at the same time that the season is expected to be picking up, so we were fortunate in that respect,” Koepsell said.
But the shipping delays meant that the company does not have the diverse selection it usually does, limiting customers’ options.
Inventory is further constrained by tight container availability, with ports in Asia remaining congested and ocean freight rates reaching record highs, according to Everstream Analytics.