Fur­ni­ture lo­gis­tics: Road rules

Im­port­ing fur­ni­ture through rail can be 30-40 per cent cheaper, but still longer de­lays in de­liv­ery and the risk of dam­age in mul­ti­ple han­dling makes im­porters stick to the road

Maritime Gateway - - Contents - Omer Ahmed Sid­diqui

Im­port­ing fur­ni­ture through rail can be 30-40 per cent cheaper, but still longer de­lays in de­liv­ery and the risk of dam­age in mul­ti­ple han­dling makes im­porters stick to the road.

Be it a house or of­fice, the way it is fur­nished and main­tained gives the first im­pres­sion of the sta­tus of the peo­ple liv­ing there. Grow­ing ur­ban­i­sa­tion, in­creas­ing pur­chas­ing power of peo­ple have trans­formed fur­nish­ing from a mere ne­ces­sity to sta­tus sym­bol, with many peo­ple be­long­ing to the af­flu­ent class chang­ing their fur­ni­ture ev­ery year or so, to keep their homes and of­fices look­ing trendy. This very trend is also fu­elling de­mand for im­ported fur­ni­ture in the coun­try, which is more at­trac­tive and el­e­gant, com­pared to the rou­tine de­signs of­fered by the mom and pop stores in the counuae-based try. “While the de­mand for im­ported fur­ni­ture has been in In­dia since the late 90s, but it sig­nif­i­cantly picked-up in the year 2000, with peo­ple mostly pre­fer­ring fur­ni­ture made from mar­ble and those with glass top,” says Arvind Agar­wal, Pro­pri­etor of Cari­gari,a lead­ing im­ported fur­ni­ture sup­ply­ing chain in the state of Te­lan­gana.

The In­dian fur­ni­ture mar­ket is highly frag­mented and un­or­gan­ised, and is ex­pected to grow to over $27 bil­lion by 2022, which rep­re­sents a huge op­por­tu­nity for fur­ni­ture ex­porters from across the globe. With de­mand set to out­strip sup­ply, many multi­na­tional brands such as IKEA, Wal­mart and Danube have set their foot into this lu­cra­tive mar­ket.

In terms of mar­ket size In­dia is the 14th largest mar­ket in the world val­ued at $18.93 bil­lion in 2016 and fore­cast to reach $21.22 bil­lion by 2018, grow­ing at a CAGR of 6.40 per cent, re­veals Hong Kong Trade De­vel­op­ment Coun­cil (HKTDC). The coun­try is also one of the largest im­porters of of­fice fur­ni­ture, ac­count­ing for just un­der one-fifth of global im­ports in the sec­tor. Cur­rently, de­mand for im­ported fur­ni­ture in both hous­ing and of­fice cat­e­gory is grow­ing, but it is a bit higher on the of­fice fur­nish­ing side.

Fac­tors sup­port­ing mar­ket growth

While it is only the up­per class of the so­ci­ety that opts for im­ported fur­ni­ture, but still grow­ing ur­ban­i­sa­tion, rapidly ex­pand­ing dis­tri­bu­tion net­work of ex­clu­sive stores, easy avail­abil­ity of stan­dard­ised fur­ni­ture prod­ucts, grow­ing hos­pi­tal­ity and tourism sec­tor, brand con­scious­ness among con­sumers con­trib­ute to the grow­ing mar­ket of im­ported fur­ni­ture. Those who can af­ford also travel to China and Italy for im­port­ing fur­ni­ture. Even though cus­tomi­sa­tion of fur­ni­ture to re­sem­ble im­ported ones does hap­pen in In­dia, but still it doesn’t give the fin­ish and el­e­gance that im­ported fur­ni­ture of­fers.

“How­ever, it is to be noted that im­ported fur­ni­ture mar­ket in Te­lan­gana is still in a very nascent stage and ac­counts for hardly about 2 per cent of the to­tal fur­ni­ture sold in the state,” re­veals Pradeep Gupta, Direc­tor, Din­te­rio, an­other re­puted re­tail chain of im­ported fur­ni­ture. The mar­ket due to its frag­mented and un­or­gan­ised na­ture is very com­pet­i­tive as well.

Im­port mar­ket

China is the largest ex­porter of fur­ni­ture into In­dia with a share of about 80 to 90 per cent, fol­lowed by Malaysia, Turkey, Italy and other Euro­pean coun­tries. But in the fu­ture the mar­ket dy­nam­ics are go­ing to change be­cause China is be­com­ing ex­pen­sive by about 10 to 15 per cent ev­ery year, says Pradeep. More­over, with the en­try of global players like IKEA, who plan to man­u­fac­ture and source their global re­quire­ments from In­dia, the fu­ture will be for ‘made in In­dia’ prod­ucts. These players are ex­pected to cap­ture a big chunk of un­or­gan­ised im­ported fur­ni­ture mar­ket. Ear­lier, a lot of fur­ni­ture used to come from Malaysia, but grad­u­ally as im­ports from China picked up, Malaysia has now be­come a mar­ginal player.

Fur­ni­ture is largely im­ported by ma­jor im­port houses in Delhi, Chen­nai, Bom­bay, Visakha­p­at­nam and Ban­ga­lore, which is then dis­trib­uted to re­tail­ers across the coun­try.

Lo­gis­tics sce­nario

Im­ports from China largely come through Chen­nai Port fol­lowed by Mumbai Port. In Te­lan­gana state, de­mand for im­ported fur­ni­ture is mainly in Hyderabad and it comes through the Con­cor ICD in Sanath­na­gar. But choos­ing the lo­gis­tics mode makes the dif­fer­ence, be­cause it takes just 24 hours for fur­ni­ture cargo to reach from Chen­nai Port to Hyderabad through road, while it may take sev­eral weeks for the cargo to be de­liv­ered through rail. Even though mov­ing fur­ni­ture by rail is cheaper, but im­porters in the city pre­fer to bring it by road, be­cause through road the con­tainer gets cleared at the Chen­nai or Mumbai port and di­rectly comes to the ware­house of the im­porter, whereas if brought through rail, the fur­ni­ture has to be destuffed at the ICD and again trans­ported to the ware­house. There is high risk of fur­ni­ture get­ting dam­aged dur­ing this mul­ti­ple han­dling.

Giv­ing a rough es­ti­mate of lo­gis­tics cost through road and rail Pradeep said, “mov­ing a 40 feet con­tainer from Chen­nai Port through road to Hyderabad will cost ap­prox­i­mately `43,000. And if the same con­tainer is im­ported at Mumbai Port and moved to Hyderabad through road it will cost about 10 per cent more. But if the same con­tainer is moved through rail then the lo­gis­tics cost will be about 30 to 40 per cent cheaper.

An­other fac­tor that in­flu­ences the lo­gis­tics cost is the time of im­port.

If a con­tainer of fur­ni­ture has to be im­ported from China to Chen­nai Port dur­ing the peak sea­son then it may cost about $1500. The peak sea­son is gen­er­ally dur­ing year end Christ­mas time or Di­wali and Dussehra. While in the lean pe­riod the same con­tainer can be im­ported for $600.

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