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Import rates climb 15%

Many manufacturers who import their products are playing a waiting game this month to find out not if freight rates will increase, but by how much.

Rising fuel costs across the nation are sure to directly affect the rates. According to the Energy Information Administration, gasoline demand is forecast to increase 1.8% from last summer, pushing prices to a peak average of $2.35 a gallon this month. Imports will surely have to make up the difference to meet demand.

"We can all hope it'll stay constant — that would be the best thing that could happen," said Russ Sorenson, vice president of Hanamint. "But I don't think a downward cycle is going to be the case."

"It's inevitable it's going to go up," said Mike Ervin, president of Tickle Imports. "But by how much — a few dollars or a few hundred dollars?"

An increase in freight rates will undoubtedly affect retailers' margins as well.

"Cost is the reason we import, isn't it?," said Dean Luckino, president and CEO of Georgia Backyard, Inc.

According to records compiled from the U.S. Customs Service, the U.S. International Trade Commission and Casual Living market research, U.S. imports of casual furniture imports rose 12% between 2003 and 2004, from $1.138 million to $1.273 million. That total is four times more than 2002–2003, when imports increased by 3%.

China is still the leading source of import product with more than $822,000, a 15% change from the previous year, with the most dollars generated from metal outdoor seats with textile covers and umbrellas.

Metal leads imports of major materials by 37%, generating more than $470,000 in 2004, followed by rubber/plastic (a category that increased its dollar value by 35% since 2000), wicker/rattan, 17%, and umbrellas, 14%. After an increase of 38% in 2003, teak accounted for only 1% of imports, with its dollar value decreasing by 1% since 2000.

Many retailers are realizing to be truly competitive, they must carry some imports, but some say that doesn't mean everyone should.

"I really don't have a choice," said Steve Magnotti, president of The Fireplace & Patioplace, Pittsburgh. "That's the way the business is to stay competitive in the specialty market. It's a segway between domestic and the mass merchants to carry a higher price group and lower price group. Mass merchants have always sold outdoor furniture, but 10 years ago, it was cheap and looked cheap, and that's not the case anymore."

"I'm sure some dealers import more than they ever thought they would," Sorenson said. Importing calls for better projection and planning because of delivery — many times retailers have a three-to-six week ship time — and retailers could run into a problem with special orders and "finicky" customers who change their mind about a color or style than originally decided upon, he added.

"It's a leap of faith for a retailer to go deep into a new product," Sorenson said.

"I think imports are a wonderful opportunity for the industry, and always have been," said Al Arad, vice president of marketing for Cast Classics.

After years of working with Mexico, Cast Classics formed a partnership last summer with Shanghai Metalworks, a 300,000-sq.-ft. facility on the outskirts of Shanghai, designed specifically to produce product for the specialty retailer.

The company's first year has been so successful, another 500,000 square feet of space is being added adjacent to the facility, and will include production space, a dormitory and showroom/office space, expected to open in about three months.

"Being in China gives us the ability to do very detailed design and a dealer can put value on the floor that is very compelling," Arad said.

Business in China also is growing at an unprecedented speed — and the labor crunch is sure to affect business. "They are growing faster than they can handle," Ervin said. "I placed orders last September that I'm just now getting. It used be to a 90 to 120 day waiting period, now that 120 has been blown out of the water. It's 150 days to six months before you have it."

Another challenge is trust. Building relationships with manufacturers overseas may take time and be difficult, not only because of cultural differences, but also because retailers often are dealing with a middleman rather than the manufacturer himself.

At the same time, technological advances such as e-mail and video conferencing help build partnerships.

"Fostering relationships is the same anywhere — it's being in the right place at the right time and being able to trust who you are working with," Arad said. "It's easy to work around (the distance)."

Knockoffs pose additional threats as well.

"A lot of what was done foreign was piracy, knockoffs, and that's changing" Luckino said. "Guys like Jim Lee (president and CEO of Hanamint) have done a great job in developing their own product lines, but that doesn't mean everyone is like Jim Lee."

"Retailers are starting to realize and support companies that have the integrity to design their own product," Arad added. "We vigorously enforce our intellectual property rights when we can."

Leading sources of U.S. imported outdoor furniture and principal products
Jan.–Dec. 2004, in thousands of dollars

2004 2003 revised % change from 2003
WORLD $1,273,074 1,138,244 12%
China $822,951 $715,396 15%
Metal outdoor seats with textile covers 204,069 192,326 6
Umbrellas, garden or similar 149,095 131,825 13
Metal outdoor seats without textile covers, household 135,736 95,695 42
Metal outdoor seats without textile covers, other 74,460 61,533 21
Rattan furniture, household 46,528 51,650 -10
Canada $100,231 $94,672 6%
Plastic furniture 44,715 41,037 9
Rubber/plastic seat parts 15,062 14,541 4
Reinforced or laminated plastic furniture parts 9,142 7,361 24
Rubber/plastic (not reinforced or laminated) furniture parts 8,510 5,164 65
Rubber/plastic outdoor seats, without textile-covers, other 5,723 7,018 -18
Indonesia $70,379 $68,713 2%
Rattan seats 17,519 20,769 -16
Umbrellas, garden or similar 14,032 11,924 18
Teak chairs 13,351 11,895 12
Rattan furniture, household 11,452 13,457 -15
Cane,osier, bamboo seats 4,886 3,462 41
Philippines $59,230 $51,645 15%
Rattan seats 23,274 21,380 9
Rattan furniture, household 17,839 15,909 12
Cane, osier, bamboo (not rattan) furniture, household 6,672 4,081 63
Cane,osier, bamboo seats 5,314 4,307 23
Rattan seat parts 1,660 1,593 4
Taiwan $41,457 $34,888 19%
Rubber/plastic seat parts 8,824 7,955 11
Metal outdoor seats with textile covers 7,455 420 1675
Rubber/plastic (not reinforced or laminated) furniture parts 6,220 5,141 21
Plastic furniture 4,485 1,731 159
Reinforced or laminated plastic furniture parts 4,185 4,026 4
Italy $26,567 $28,516 -7%
Rubber/plastic seat parts 4,662 4,392 6
Metal outdoor seats without textile covers, other 4,237 3,724 14
Rubber/plastic (not reinforced or laminated) furniture parts 2,839 2,291 24
Plastic furniture 2,426 2,128 14
Reinforced or laminated plastic furniture 2,222 3,357 -34
Mexico $21,897 $28,222 -22%
Metal outdoor seats without textile covers, other 5,465 6,614 -17
Rubber/plastic (not reinforced or laminated) seats 3,347 2,620 28
Rubber/plastic seat parts 2,654 2,525 5
Reinforced or laminated plastic furniture parts 1,747 2,153 -19
Reinforced or laminated plastic seats, household 1,599 1,445 11
Israel $21,700 $18,732 16%
Reinforced or laminated plastic furniture 14,593 13,015 12
Plastic furniture 7,079 5,717 24
Rubber/plastic outdoor seats, without textile-covers, other 28 0
Hong Kong $13,112 $7,879 66%
Metal outdoor seats without textile covers, other 2,284 216 957
Rattan furniture, household 2,216 1,729 28
Cane, osier, bamboo (not rattan) furniture, household 1,581 258 513
Umbrellas, garden or similar 1,330 1,346 -1
Metal outdoor seats without textile covers, household 1,221 336 263
Germany $11,794 $12,961 -9%
Rubber/plastic seat parts 4,637 6,935 -33
Metal outdoor seats without textile covers, household 1,390 1,055 32
Plastic furniture 1,171 1,189 -2
Rubber/plastic (not reinforced or laminated) furniture parts 1,105 1,731 -36
Rubber/plastic (not reinforced or laminated) seats 820 405 102


Import Data

Source: U.S. Customs Service, U.S. International Trade Commission, Casual Living market research
Imports by country of origin
China 65%
Canada 8%
Indonesia 6%
Philippines 5%
Taiwan 3%
All other countries 14%
Imports by major material
Metal 37%
Rubber/plastic 20%
Wicker/rattan 17%
Umbrellas 14%
Parts 11%
Teak furniture 1%
Change in dollar value of major import categories, 2003–2004
Metal 19%
Rubber/plastic 8%
Wicker/rattan 0%
Umbrellas 13%
Parts 17%
Teak furniture 1%
Change in dollar value of major import categories, 2000–2004
Metal -7%
Rubber/plastic 35%
Wicker/rattan -7%
Umbrellas 33%
Parts 8%
Teak furniture -1%
Casual furniture imports, 2000–2004
IN MILLIONS
2000 1,206
2001 1,100
2002 1,109
2003 1,138
2004 1,273
Percentage change
2000–2004 6%
2003–2004 12%


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