While most of furniture transport moved off the rails decades ago following trucking deregulation, Steve Wolfe, vice president for global supply chain and logistics at Stanley Furniture Co., counts on a rail link offered through the Port of Virginia as a key to low transportation costs.
As Wolfe recounts in an interview with the American Journal of Transportation, much has changed over the course of his nearly 40 years in furniture logistics, but, at least for High Point, N.C.-based Stanley, rail stands as a vital part of the equation.
What role does the Port of Virginia play in Stanley’s supply chain? Our distribution center is located in Martinsville in southwestern Virginia, and the Port of Virginia is the closest deepwater port. Other ports on the Eastern Seaboard, such as Savannah and Charleston, are not in consideration because of the distance and the higher inland transportation costs that would be incurred. Based on this, I route the majority of my cargo via Norfolk.
Not long after I joined Stanley in late 2010, the Port of Virginia introduced a rail service [via Norfolk Southern] from the port into Greensboro, N.C. The proximity of this location to Martinsville and this service allows me to further reduce inland costs.
In addition, VIT [Virginia International Terminals] worked with the legislature at the Commonwealth of Virginia to provide a tax credit per TEU [20-foot-equivalent unit] for Virginia-based companies using this initiative.
I may have been the first client to utilize the new service. We happened to be located in a sweet spot for it [with Greensboro being 50 miles south of Martinsville and still liable for Virginia taxes].
How has furniture logistics changed from when you entered the business and much production was domestic to today, with imports dominating and, more recently, a shift from China to Southeast Asia production centers?
When I started with Broyhill Furniture in 1978, manufacturing was still 100 percent domestic and the trucking industry was still regulated by the ICC [Interstate Commerce Commission]. At that time, 70 percent of the furniture produced at Broyhill was shipping on rail, the Southern Railway. We had one warehouse that could place 40 railcars under roof, and, starting out of college as a management trainee, I remember well loading boxcars.
When the motor carrier industry deregulated [in 1980], the railroads became noncompetitive and disinterested with furniture freight. Furniture eventually became a trucking commodity, and the industry has had the luxury of being serviced by the Specialized Furniture Carriers industry for all 48 contiguous states and Canada.
Furniture manufacturing of wood products remained domestically produced well into the mid-2000s, although sourcing from offshore had already began in the mid ’90s. As the transition picked up steam, mainly in China to start with, domestic factories began to be idled. Many of these facilities were transformed into distribution centers.
As ocean logistics became more important, our jobs also transitioned from transportation managers to supply chain managers. We began traveling overseas to work with factories and their logistics teams as we increased the flow of products.
I began negotiating my first ocean contracts in 1994. They were very small contracts as there were not a lot of finished goods coming in at that time, mainly component parts to be used in our domestic factories and largely for the wood products. Today, the majority of upholstered furniture continues to be manufactured in the U.S.
We had to relearn the dynamics of the ocean freight industry, and those dynamics are volatile and change every year now. This year is no different and will be one of the most challenging.
China was the original mega-country that furniture manufacturing moved to. Many of the factories in China were and are actually owned by Taiwanese entrepreneurs.
As the anti-dumping amendment was implemented in the U.S, in the early 2000s, which imposed various tariff levels on bedroom furniture exported from China at undermarket prices, many of the factory owners began relocating to Southeast Asia. Other commodities such as apparel, footwear and electronics have also migrated to these countries.
At Stanley, we have not sourced in China for several years now. Almost 70 percent of our products are now manufactured in Vietnam and the balance in Indonesia.
Regarding ocean transportation, the ocean carriers have implemented great services via the Suez Canal to the East Coast ports. This is also a transition as early on the vessels moved via the Panama Canal and many still do.
What challenges are posed by the launch of a new collection, and how do you respond successfully?
One of our largest challenges and for many in the furniture industry is the long lead time of the product development cycle, all the way through the actual production of the product. It’s usually a nine- to 12-month process from when the product sketches are developed to the time it gets to a retail floor.
So, as supply chain managers who negotiate ocean contracts once a year, the challenge becomes in attempting to maintain an equal or lower rate structure based on what we believe to be the life of the product. Volatile swings in the rates or extra surcharges can greatly affect margins on a commodity that is already margin-sensitive, and furniture can enjoy a three- to six-year sales run, on average.
As a graduate of one of the early transportation and logistics programs – in 1977 from the University of Tennessee – how do you view the importance of higher education focusing on the supply chain?
It’s more and more critical to understand the dynamics of the supply chain. I was fortunate to have a neighbor growing up who was a transportation professor at Tennessee and guided me into the program and introduced me to the business. I had the opportunity also to attend on a baseball scholarship, which helped immensely.
When I graduated in ’77, besides Tennessee, there were maybe only two others – Penn State and Texas A&M – that offered this degree. Most large institutions such as Georgia Tech and Ohio State and some smaller colleges are implementing supply chain programs. Appalachian State, where two of my children went, now has a minor in supply chain.
As the global economy affects everybody and how important it is to efficiently get things from Point A to Point B, I think these programs are right on top of what they need to be doing.
How do you most enjoy spending your time when not working?
I still play basketball competitively, and my wife and I travel when possible.
We are empty nesters now, and our children live in different cities. Our oldest son, wife and grandchildren live in Knoxville where he settled after graduating from UT, so we make that trip. So I would say we like to do some traveling.
Just got to avoid that traveling on the basketball court.