Now is the time to begin addressing China tariffs

By Thomas Russell for FurnitureToday.com. Posted on August 9, 2018

A recent conversation with a good friend in the industry had me realizing how critical the issue of proposed tariffs on Chinese-made goods is for the entire industry.

The source recently told me that retailers the company has has been in contact with on the issue aren’t too concerned. Translation: They simply don’t think there will be any tariffs placed on Chinese-made furniture.

That said, furniture – from case goods and upholstery to bedding – is indeed on the list of proposed 25% tariffs now under review. And based on the fact the administration has hit some $50 billion in other Chinese products with a 25% tariff, it’s likely that we’ll see tariffs on furniture starting this September or soon after.

Thus, the worst thing the industry could do right now is to ignore the issue and hope for the best. Manufacturers and retailers should be in regular communication to see what if anything can be done to address the tariffs. Will this mean sharing the cost burden to minimize the impact on consumers? Moving the product to other source countries? What about inventory in China warehouses currently? Will someone have to eat the cost on that?

These are questions many in the industry are likely already addressing. But if not, it might be time to start the conversation. That is especially true when you consider that with $13.6 billion in shipments last year, China remains the largest exporter of residential furniture to the U.S. market. In this case, it’s better to be prepared than not.

Room Service, Explained

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JULY 11, 2018 / From SECRETHOTELIERBLOG

Depending on the hotel, Room Service is another hybrid department that has had significant changes in the last 10-15 years.  Larger resort properties may have a stand-alone department (especially if they offer 24-hour room service), but smaller properties may borrow from other departments (often your busiest times will be early and late- not much demand (for the most part) for daytime since people are often out and about during the day) when needed.

For limited service hotels that don’t have room service departments (or restaurants), that demand for in-room dining gets filled in one of two ways- either through an arrangement with a nearby restaurant (during my days doing new openings and transitions 15+ years ago, I found that a few well-known chain restaurants that had entrees less than $20 did very well with that kind of arrangement) or more recently with food trucks.  If food trucks continue to be a thing and scale into suburbs and rural areas, this may be a long-term solution, but I’m not sure we’re there yet (in 2-5 years I reserve the right to be corrected).

The nearby restaurant fills the order and arranges for pickup/delivery.  I find it works best when it’s something fairly well-known or at least a restaurant specializing in something regionally known.  An example would be a set-up I helped work with a hotel and a nearby deli in New York; the deli had fantastic sandwiches, desserts and soups which worked great with diners.

Food trucks work great with younger customers or customers willing to roll the dice (ideally on a local or regional specialty), as it were.  Some hotels will arrange for food trucks to park next to the lobby, which is fantastic.  The food truck gets built-in customers while the hotel satisfies a need without staffing (and food trucks are good at communicating via social media and have proven adept at using a medium that drives an audience).  Again- local favorites work best.  If I’m in, say, Miami I’ll look for a food truck doing a Cuban sandwich or the Cuban coffee shots (which are like rocket fuel; drink more than two of them and they’ll scrape you off the ceiling).  If I’m in Kansas City I’m looking for barbecue and/or takes on barbecue because I know it’s probably going to be good.   If I’m in Texas I’m looking for their spin on barbecue, Tex-Mex, or their beyond-delicious breakfast tacos.  You get the idea.

Orders are taken over the phone (traditionally) but some hotels are experimenting with online ordering.  As of this writing smart-phone apps for ordering room service aren’t the standard yet, but I’d expect this to be mainstreamed sooner than later because of costs (it’s cheaper than having someone there, and in the end if you can save costs you’re going to use that option).  The person taking orders sends the dupe to the kitchen who then prepares the food.  Then a food runner will put the food on a tray and run it up to the guest room, get the guest to sign for it, and leave the tray in the room.

When you’re done enjoying that fine room service meal, you put the tray outside your room, and someone (usually housekeeping or someone from the food and beverage department designated with this task) stops by overnight to pick up all of the trays.  It’s a good sign that a hotel is understaffed or is poorly run if you’re leaving your room in the morning (after 7:00 a.m.) and the trays are still in the hallway (it’s a bad sign for the hotel) when you return in the evening.  I have to admit it’s interesting to see the trays if I’m staying somewhere and leaving early (curious as to what they ordered and in what state of mind were they in).  Additionally, people can and will put their trash out with the room service tray (including items that are best left in the guest room trash can, but we digress).

One of the complaints people often make about room service is with respect to the service charge and delivery charge that hotels charge on room service orders.  Room service is a convenience provided to guests (you could put actual clothes on and walk to the hotel restaurant, or you can order in your room), which means that you pay for said convenience (kind of like how the hotel mini-bars work).  Nobody is forcing you to order room service (just like nobody is forcing you to pay $8.00 for a candy bar of $15.00 for an airplane bottle of booze- it’s your choice- but I can neither confirm nor deny the existence of tiny recorders in the mini-bars that are specially programmed to convince you the path to happiness will be found in those airplane bottles).  In short, if you want the convenience, then you’re paying.  That’s how the world works.

And yes, you also need to tip the delivery person.  If you don’t like it, then put some pants on and go down and eat in the hotel restaurant, or leave the hotel and dine out somewhere.  Not complicated.  If you want to replicate the room service scenes in “Mad Men” (the one with John Slattery enjoying room service with Joan during a mid-day hotel romp or “Point of No Return” (the one with Bridget Fonda just before she gets a call to kill someone) then that comes at a cost.  So pay up.

Why the costs?  Supply and demand for one; it costs money to print menus, have someone in the kitchen who can prepare orders, have someone available to run the food up to the room (not to mention the added cost of keeping perishables on hand), and the cost of having supplies on hand to handle the orders (oh, and those little bottles of ketchup and mustard aren’t free nor are those little jars of jam/preserves).  Plus, the number of people who take silverware and/or napkins is astonishing.  I’m not remotely joking- do people not have silverware at home?  It’s not like the stuff’s gold plated. Doing silver inventory (yes- hotels do this where they count their silverware) it’s shocking how much of it walks out the door.  It costs money.

I get that it’s not always about an... activity break that leads people to order.  Sometimes, you get in late and don’t feel like going out.  Or you want an early breakfast.  Other times, you may have work to do when get in and ordering room service enables you to work in your room and get something to eat.  The common theme is convenience.  It’s why a soda costs more at 7-11 than it does at a grocery store.

If you’re looking at a room service menu and don’t see something, you can always ask if they can make something off the menu (within restrictions).  If they have a burger that comes with fries, you can ask about other options.  If they have it, odds are they’re happy to swap it out.  Same with requests; if you want your meal with/without something, ask.  The worst they’ll tell you is that they can’t accommodate but in most cases they’ll at least try.

So by all means, order room service and enjoy a room service meal in that fluffy hotel bathrobe.  But don’t steal the damn bathrobe either.  Please.

Some Tips for Proper Packaging

  The UN's stamp of approval for treated wooden container material

The UN's stamp of approval for treated wooden container material

“An ounce of prevention equals a pound of cure!” FF&E purchasing firms should confirm that their purchase order terms require suppliers to properly package and label before shipment. Packaging materials used must meet required standards, and if any wood is used (bracing, crating, or pallets), it must comply with the international standards that require fumigation or kiln-dried lumber to prevent infestations of wood boring insects (ISPM-15). Failure to comply may result in seizure by customs officials.

Thinking of Going to San Francisco?

We're working on a great project in San Francisco and really enjoying the city. We figure you would enjoy it, too, so here are some ideas for what to do on your trip to Frisco!

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You'll definitely want to explore Golden Gate Park and their many cool attractions, such as  the Conservatory of Flowers and the Japanese Tea Garden, then proceed to the historic Presidio and on to the Golden Gate Bridge. Walking or biking the bridge is a cool way to experience it, but another way is to rent a convertible for the day and drive across. While you still have the car, the Willie L. Brown Jr. Bridge has a permanent art installation, the Bay Lights, that is incredible to experience at night from the top deck. 

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You can take a tour on the historic SS Jeremiah O'Brien at Fisherman's Wharf, one of two remaining Liberty Ships from World War II. She's a living museum on the National Register of Historic Places and a National Historic Landmark. And, if you keep track of her schedule, you take a day sail on the bay.

Once you get your land legs back after disembarking from the Jeremiah O'Brien, we recommend you go to Pier 39 and check out the sea lions! Then take a swing through Ghirardelli Square and get some ice cream at the Ghirardelli Ice Cream Shop. From there, you can take the cable car to the shops and restaurants on Market Street.

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Of course, San Francisco is known for its Victorian houses. You can drive around in your convertible to see some of them, but if you feel like getting details and lunch, you should go on a walking tour with a local. 

Alcatraz is a weird interesting place to check out. These are just a few of the amazing things you can do while you're in San Francisco. You can also take day trips to the Napa Valley, Muir Woods, Half Moon Bay, Carmel-by-the-Sea, and Monterey, among others.

Trump considers hiking proposed tariffs on $200 billion in Chinese goods to 25%

By Jacob Pramuk for CNBC.com

President Donald Trump has told his top trade official to consider raising proposed tariffs on $200 billion in Chinese goods to 25 percent from the 10 percent rate his administration is currently mulling, the administration announced Wednesday.

The president's direction to U.S. Trade Representative Robert Lighthizer comes as the White House tries to use duties, among other tools, to push China to abandon alleged unfair practices and reach a potential new trade deal. Trump aims to balance a desire to force Beijing to the negotiating table with efforts to avoid escalation in a potentially devastating trade war.

No particular Chinese action led to the president's recommendation, said a senior administration official, who declined to be named, on a conference call with reporters. Reports leading up the announcement suggested the U.S. could take the action in part because the value of China's currency has fallen, thereby making its exports more competitive.

Asking Lighthizer to consider hiking the tariff rate is part of the administration's ongoing push to get China to open up its markets, increase competition and abandon retaliatory tariffs on U.S. goods levied in response to the duties imposed by Trump, an official said.

"This week, the President has directed that I consider increasing the proposed level of the additional duty from 10 percent to 25 percent. The 25 percent duty would be applied to the proposed list of products previously announced on July 10," Lighthizer said in a statement. "The Trump Administration continues to urge China to stop its unfair practices, open its market, and engage in true market competition. We have been very clear about the specific changes China should undertake. Regrettably, instead of changing its harmful behavior, China has illegally retaliated against U.S. workers, farmers, ranchers and businesses."

The administration will extend the public comment period on the tariff proposal to Sept. 5, from the currently planned Aug. 30, to allow feedback on what tariff rate the White House should impose. The trade representative has not made a final decision on whether to impose the duties.

U.S. trade officials are still engaged with their Chinese counterparts on a potential agreement to avoid a tariff back-and-forth that could wreak havoc on some American businesses and consumers.

The White House's original move last month to target $200 billion in Chinese goods came just days after Beijing retaliated against the administration's imposition of 25 percent tariffs on $34 billion in goods. The Trump administration is currently considering whether to put duties on an additional $16 billion in goods, but that review is ongoing, an official said Wednesday.

Trump, in an interview with CNBC, threatened to impose tariffs on all $505 billion in Chinese goods imported to the United States if Beijing does not make trade concessions.

Both Republican and Democratic lawmakers have shown concerns about possible escalation of a trade conflict with China. The U.S. agricultural industry has also voiced fears about damage wrought by an escalation.

Backed by spot rate strength, trans-Pac carriers levy hefty GRIs

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From Bill Mongelluzzo for www.joc.com

The ongoing uptrend is noteworthy because, historically, the largest increases in spot rates often occur in August, usually the busiest month of the peak shipping season, and October, the last month of the holiday shipping period.

Emboldened by signs of import strength, and with spot rates higher than usual ahead of the peak season, carriers are pushing for hefty spot rate increases of $600 to as much as $1,000 per FEU in August and September, especially to the East Coast.

“Significant $600-800/40-foot GRIs [general rate increases] are anticipated for early August, which would represent nearly a 25 percent increase in China-East Coast shipments. These are driven by stable shipments, cancelled services and a typhoon that hit Chinese coastal cities early this week,” Zvi Schreiber, CEO of Feightos, stated in the Freightos Baltic Index Update.

The rate hikes are expected to continue in September. Hapag-Lloyd stated in a customer advisory that it will seek a $700 per FEU increase from East Asia to the United States effective Sept. 1, and Evergreen Marine Corp. announced a Sept. 1 increase of $1,000 per FEU from Asia and the Indian subcontinent to both coasts.

Spot rates jump to US East Coast, West Coast before peak season

Spot rates from China to the East Coast this week increased 7.4 percent over last week to $2,846 per FEU, and 16.2 percent to the West Coast to $1,877 per FEU, according to the Shanghai Containerized Freight Index published under the JOC Shipping & Logistics Pricing Hub. Those late-July price hikes stand out because the largest increases in spot rates often occur in August, usually the busiest month of the peak shipping season, and October, the last month of the holiday shipping period.

While it is not possible to quantify how much of July’s increase in cargo volume was a move by beneficial cargo owners (BCOs) to get ahead of the Trump administration’s import tariffs on some imports of Chinese merchandise, terminal operators say their July was a busy month. “Our volumes were very strong,” Ed DeNike, CEO of SSA Containers, which operates terminals in Seattle, Oakland, and Long Beach, said Friday. However, DeNike said carriers indicate peak season volume increases this year will be “no more than normal.”

However, a terminal operator in New York-New Jersey said Friday, “Volume has been strong in June and July, and we expect August to be even stronger.” East Coast ports from New York-New Jersey to the South Atlantic in recent years have been experiencing stronger growth than West Coast ports, due initially to the West Coast labor disruptions during the 2014-2015 contract negotiations, and especially since 2016 with the widening of the Panama Canal and the elevation of the Bayonne Bridge in New York-New Jersey.

According to PIERS, a JOC.com sister product, East Coast growth during the August-November peak season periods has been greater than West Coast growth in imports since 2011. Last year East Coast imports increased 8.2 percent — nearly triple West Coast growth. As a result, West Coast market share of imports for the first time fell below 50 percent in 2017 to 49.7 percent. The growth appears to have accelerated since 2014-2015, with West Coast ports losing 1.5 points of market share each year in 2015-2017, according to PIERS.

Some GRIs reflect emergency fuel surcharges

Some GRI increases the past month reflected emergency fuel surcharges, as carriers reacted to a 53 percent increase in bunker fuel prices since last summer. However, the surcharges have been applied unevenly. “We pay no emergency bunker fuel surcharges,” said the vice president of transportation at an importer of home improvement products who ships only under contract and avoids the spot market. “Some carriers are pushing for the emergency surcharges, some are not,” said a coffee importer in reference to spot market shipments.

BCOs could also be looking ahead to August and September when carrier alliances will eliminate three weekly services to the West Coast and one to the East Coast, which will reduce capacity more than 6 percent to the West Coast and 1.3 percent to the East Coast, according to Alphaliner. When capacity is reduced between port pairs, vessels in Asia fill up and cargo is “rolled” to the next voyage. BCOs normally get anxious when their cargo is rolled, which makes them more receptive to spot rate increases. “Some carriers are saying, ‘We’ll take your booking, but it will be subject to a roll,’” said the importer of home improvement products.

With vessel utilization rates in July about 92 to 93 percent to the West Coast and 95 to 97 percent to the East Coast, the suspension of services could be enough to generate cargo rolls in Asia next month if space tightens further. However, since excess capacity in the eastbound Pacific this year has been running about 6 percent to the West Coast and somewhat less to the East Coast, the capacity cuts may simple equalize supply and demand. An importer said he suspects that carriers are attempting to “rightsize” their capacity this peak season rather than manipulate rates.

Tight truck capacity nationwide following enforcement of the federal electronic logging device requirement beginning April 1 has resulted in an increase in trucking rates, although so far the capacity has been available for BCOs who accept the higher prices that truckers are quoting. “They realize now that trucking companies are not a commodity,” said Scott Weiss, vice president of development at Port Logistics Group in Southern California.

Another reason why drayage capacity is adequate so far in Los Angeles-Long Beach is that the terminals for the most part are operating efficiently, Weiss said. In past years, terminal congestion resulted in long waits at the gates, which reduced effective trucking capacity in the harbor. “A lot of times we’ve been critical of the ports. They deserve a pat on the back for making the necessary changes,” he said.

Carriers are likely to push any advantages they have in getting higher spot rates this peak season because the service contracts they signed in the spring with their largest customers were a disappointment. Carriers entered the contracting season with hopes for meaningful price increases, but instead they ended up signing contracts in the range of $1,100 to $1,200 per FEU to the West Coast and $2,100 to $2,200 per FEU to the East Coast, which is actually about $100 lower than last year’s service contract rates to both coasts.

Very Superstitious: The truth behind hotels’ missing 13th floors

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Now I have Stevie Wonder stuck in my head. There are worse things in life. 😉

As Raf Miastkowski says in his article for Orbitz:

Next time you’re in a hotel elevator, try to find the button for the 13th floor. There’s a good chance that you won’t be able to. Sound nuts?

For years, hoteliers have succumbed to good old-fashioned superstition when they’ve crafted their blueprints. And while the practice of “removing” the 13th floor—or erasing its traces—may seem a bit drastic, it can be partly attributed to a very real phobia. Specifically, triskaidekaphobia, which is an extreme suspicion of the number thirteen. To wit, Friday the 13th gets a bad rap as an unlucky day, but there are also folks who believe it’s no coincidence that Princess Diana died at the 13th pillar of the Pont de l’Alma tunnel, or that the Space Shuttle Columbia disaster occurred on the 113th flight of the shuttle.

By removing the 13th floor, many hotel owners are simply making sure they don’t alienate any superstitious clients. But is it worth the trouble? According to a 2007 USA Today article, 13% of Gallup Poll respondents would be bothered by a 13th floor room assignment. In the same article, hotel-industry veteran J.W. Marriott Jr. responded, “It was one of the first things I learned: Don’t go to 13.”

So, how does the practice hold up in Chicago? As one of the city’s oldest hotels, the luxurious Palmer House Hilton still has its 13th floor. “A lot of older buildings still have the 13th floor, and the Palmer House Hilton is a 140 year-old-property, so it’s tough to say whether the developers were even concerned with that at the time,” adds a hotel customer service rep at the hotel. However, two blocks away at the 105-year-old Hotel Burnham, things are a little different. “There is no 13th floor here—it goes from 12 to 14,” said a front-desk employee. “People don’t really notice it; I think it’s standard practice inChicago. Honestly, I don’t think I’ve seen a 13th floor [in the city].”

At the sparkling-new and much-anticipated Virgin Hotels Chicago, it seems as if no one is even batting an eyelash at the thought. “We actually do have a thirteenth floor, and we have 26 floors total in the hotel,” says a customer service rep. Has anyone tried to change their 13th floor reservations there? “Not yet that I’ve heard of, but we’ve only been open two months,” she said. Maybe the 13th floor is finally making a comeback.

A Skyscraper With A Waterfall?!?

The 397-foot Liebian Building in Guiyan, China, is catching attention worldwide with its 350-foot waterfall (basic takeaway: both are really tall). Rainwater and recycled tapwater is stored in basins underneath the skyscraper and pushed up pipes in the building's side by four 185-kilowatt pumps. Meant to be a tourist attraction, it is only turned on at special occasions for 10-20 minutes at a time. When it is running, the waterfall creates a fine, cool mist, and throws rainbows.

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U.S. Seaborne Imports Surging as Retailers Stock Up Early

By Erica E. Phillips for the Wall Street Journal

"Cargo streamed into U.S. seaports at a rapid rate in June, as businesses pulled in goods in an apparent rush to stock up ahead of new tit-for-tat tariffs between the U.S. and China. 

"Container imports at California’s ports of Los Angeles and Long Beach, Calif., the biggest U.S. gateway for seaborne trade, rose 8.4% in June from the same month a year ago, reaching 767,059 20-foot equivalent units, a standard measure for container cargo. The growth marked an acceleration from the spring, and a booming early start to the seasonal shipping surge that typically peaks from July to September. 

“'Peak season has come early, so to speak,' said Mario Cordero, executive director of the Port of Long Beach, Calif., the nation’s second-largest container port.

"The shipping rush comes as the Trump administration begins to impose new tariffs in a burgeoning trade showdown with China, including targeted levies on $34 billion in Chinese imports and a promise of further duties on additional $216 billion in Chinese products. Industry watchers say retailers and manufacturers are bumping up orders ahead of the tariffs. 

“'People are uncertain so they’re buffering,' said Lora Cecere, an analyst with research firm Supply Chain Insights. 'They haven’t really experienced this level of uncertainty before and they’re not sure what to do about it.'

"Mr. Cordero said about 70% of the Port of Long Beach’s import volume is directly related to China. Of that, about 7% would be affected by the first round of tariffs. 

“'What we have for sure is anxiety in the industry,' Mr. Cordero said. 'And that’s not a good thing for international trade.'

"The Port of Oakland, another gateway for Asia trade, also reported a strong acceleration in inbound volumes, with container imports growing 8.7% year-over-year in June. 

"Ms. Cecere said the rush to stock up early could cost companies later since they may not have taken the time to target the right goods to order. 'This is a supply-side solution,' she said. 'Right now I think what we’ve got is a very reactionary response.'

"Exports at the neighboring Southern California ports were up 7.2% in June to 282,371 TEUs. Through the first half of the year, combined imports and exports at Los Angeles and Long Beach rose a 4.1% from the same period last year.

Tariffs Shock Electronics Makers; Warehouses Filling Up; Freight Prices Hit Economy

Today's newsletter was written by the WSJ Logistics Report's Erica E. Phillips.

Proposed new U.S. tariffs on $200 billion in Chinese imports could reshape the global supply chain for electronics and telecom equipment. The White House’s latest tariff list would add 10% duties on a broad range of products embedded in the electronics supply chain, the WSJ’s Yoko Kubota, Dan Strumpf and Shan Li report. Electronics manufacturing has been exploding recently in China’s Guangdong province, where China may have sent a signal across the Pacific with its approval of German chemicals giant BASF SE's plans for a wholly-owned $10 billion factory. The U.S. levies would hit both Chinese and foreign companies based in China that ship components to the U.S. for use in product assembly. The tariffs also target a range of consumer goods, including furniture, bicycles and seafood. Chinese officials are weighing how to respond. China's response back may include holding up licenses for U.S. firms and ramping up inspections of American products at borders.

U.S. businesses are filling up new warehouse space as fast as it’s being built. Available warehouse space is shrinking in nearly every marketin the U.S., the WSJ Logistics Report’s Erica E. Phillips writes, even as millions of new square feet of industrial real estate is coming online. Real-estate brokerage CBRE Group Inc. says strong demand for warehouse space during the three-month period ending in June led to the 32nd straight quarter of declining availability. Industrial real estate availability fell to 7.2% in the second quarter of 2018, the lowest measure since 2000, when the first dot-com boom was driving strong consumer spending and imports from China were beginning to surge. While development of new facilities is almost matching demand, making for a “remarkably balanced” market, volatile dynamics in foreign trade could throw that off and tighten up future supply.

Transportation

Accelerating trucking costs are adding inflationary pressure to the U.S. economy. Last month the producer-price index, a measure of the prices businesses receive for their goods and services, rose a seasonally adjusted 0.3% from a month earlier, the WSJ’s Sarah Chaney reports. Freight spending, which has been climbing steadily since last fall, boosted the index as transportation and warehousing costs rose 1.3%, the largest monthly increase in the category since the Labor Department started tracking it in 2009. A tight labor market, growing energy costs and strong consumer demand have contributed to the tight freight market, driving rates to record levels in some regions. Other reports also signal that inflation pressures are building, which could translate to further pain for shippers, and perhaps higher prices for consumers. 

Supply Chain Strategies

Pharmaceutical supply chains could feel stresses now that Pfizer Inc. says it will defer planned price increases on some of its medicines. Pfizer’s move may hit middlemen like drug wholesalers and pharmacy-benefit managers, the WSJ’s Charley Grant writes. List prices are sticker prices before rebates and discounts granted to middlemen in the supply chain, and for manufacturers they aren’t paying off like like they used to. Merck & Co. raised its prices by 6.6% in 2017, but net prices actually fell by 1.9% after rebates and discounts. Middlemen that benefited from past increases now stand to take more of a hit from Pfizer’s move to appease criticism from President Donald Trump. Data from Panjiva shows the average import value per gram of all pharmaceuticals was down by 28.7% on a year earlier in May.

Can you solve the driver problem by making trucking cool again?

By Chad Prevost for FreightWaves.com

The year of the capacity crunch is getting real. With the economy continuing to grow by about 2% annually, one thing that could be slowing its growth is from the very people who deliver the goods. FreightWaves has frequently pointed out how much freight is moved through the U.S.—70% of the nation’s freight.

It’s not just carriers, big or small or in-between, that are having trouble finding quality candidates. The percentage of small businesses not able to fill open positions hit 36% in June, according to the NFIB Research Center, the highest level on record. The organization found in their most recent report that 21% of small business owners cited trouble finding qualified workers as the single-most important business problem.

FreightWaves has also covered best-case approaches to not only attracting drivers, but also in keeping them around once they land. Many in the fragmented industry still don’t even want to call the issue a “shortage.” Owner operators, for their part, have long said that the real issue is a labor issue: pay them more.

In fact, many carriers have also started raising pay, offering sign-on bonuses and numerous other incentives. But working against this is that trucking doesn't have the "cool factor" it once possessed. ELDs and other telematics are making life on the road feel way too regulated. Gone are the days when drivers were “king of the road” or “trucker cowboys.” That's why many carriers are trying to work with the new systems in order to increase predictability and efficiency for drivers. Familiar lanes, knowing where to park, and when you’re going to be home, are big pluses for most long haulers.

At the same time, trucking employment has grown for several consecutive years, ever since the Great Recession. Few have seen freight levels with such tight and prolonged capacity such as what we’re seeing.

Is there a solution, and, if so, what is it?

“I don’t really see any solution to the driver problem, unless the economy slows and the unemployment rate rises,” John Steele, CFO of Werner Enterprises, told a conference in June.

And for all the growth in trucking, as FreightWaves has recently examined, it’s not keeping pace with manufacturing, and just barely with retail. Trucking has actually fallen as a share of total U.S. employment, says Rob Martin, economist at UBS. He says that while the tight market has raised freight costs for shippers, competition between online and traditional retailers has so far kept a lid on consumer prices.

FreightWaves spoke with a couple of guys who are dedicated to solving the intractable issue, Craig Jablonski and Ben Onnie, CEO and COO of CDL Marketing. CDL Marketing works on digital strategies to encompass every aspect of online recruiting, and they look at ways that can “make trucking cool again.”

“For our parent’s generation it was all about how cars were cool, and there were muscle cars, and all that,” says Onnie. “Nobody in our generation cares about that anymore. In the past, trucks were really cool. What are you driving? What’s your equipment? Now having the newest truck isn’t enough. Have you seen those old orientation videos from 1997? They’re awful.”

“This issue is a tough one to talk about. There’s so many different angles,” says Onnie. “I’m 34-years-old, and I grew up without the tech. The kids these days, all they care about is the tech. For the younger crowd, especially for the over-the-road sector, you want it to be as high tech as possible, and when they’re on the road, as comfortable as possible. Maybe some kind of streaming service, or a cool way to play video games. From the branding side, some of the bigger carriers have more creative approaches. Show off that content on the social platforms, more stuff in a day-in-the-life. Making it cool in a different way. Some places have no branding at all.”

Regional and local guys aren’t immune to the tightening, either, says Jablonski. “We’re hearing from them as well. We’re working with more private fleets than ever, even if they’re home at night. These guys, however, they’re paying properly. There’s even guys making six figures if they’re willing to work hard. These guys have to touch freight, but they’re home at night.”

Also, they say carriers should focus on the career path aspect of driving. “People want a good work-life balance where they can actually make a decent living. And I still think there are some carriers out there that are still underpaying and also not branding,” says Jablonski.

“It’s a combination of things,” Onnie points out. “Attracting them with creative ways especially on the platforms that the younger generation is on. Paying 3% plus a few thousand dollars for a sign-on bonus isn’t enough. That’s basically keeping up with inflation. Right now with the good economy you can get a good job almost anywhere and be home.”

“It’s not just the big carriers, but there’s still a big group of the 100-500 trucks, their branding and their incentives are just average. They’re not doing anything creative. I wonder if the gigantic players just don’t even know what to do, but certainly they’re not paying enough,” says Jablonski.

Bringing in the right talent may be about highlighting the tech, and focusing on the career path. The flat screen and the ports for your gaming and a streaming package for when you’re not driving. Is it enough to solve an industry based on tight margins in a growing economy? So far, the answer, unfortunately, is no.

How will China tariffs affect the U.S. furniture industry?

Sourcing Strategies by Tom Russell for Furniture Today

Some 15 years ago this summer, talk was heating up about an antidumping case being brought against China’s wooden bedroom furniture industry. At the time, there were plenty of skeptics. They believed that duties would never take effect in an industry dominated by importers, as case goods plants across the country were closing due to competition from low cost Chinese imports. This level of injury from imports indeed was the inspiration for the case and what ultimately made it a reality for the industry, placing duties as high as 216% on the category.

What made the case so interesting and relevant was that most items facing antidumping duties up to that point were commodities – things like ammonium nitrate from the Ukraine and clad steel plate from Japan – vs. finished goods like Chinese-made wooden bedrooms. So when duties eventually went into effect in early 2005, it took the industry by storm. Even though the average duty was just over 7%, the issue caused a mass exodus from China to Vietnam, where most wooden bedroom is still made today.

All this comes to mind as the U.S. enters what could be the biggest trade war with China in memory. In the past few months, there has been talk of the U.S. imposing tariffs of about 25% on a wide mix of products. Again, this included mostly commodities that go into finished goods and that many consumers never touch or see. During this time, many industry officials doubted furniture would be affected. Even when President Trump first got elected and talked about imposing tariffs on China, many in the industry said this would never affect the furniture industry, only commodity goods like steel or big machinery.

The initial list that came out last month and went into effect July 6 did not include residential furniture. Yet that changed July 11 when the Trump Administration announced an additional $200 billion tariffs in goods, including most furniture coming out of China.

While none of this is final, the industry once again faces a harsh reality. If duties averaging 7% shifted most wooden bedroom production to Vietnam, what would happen with 10% tariffs not just on Chinese-made furniture, but also on raw materials coming out of China ranging from fabrics to MDF and particle board.

Many believe the industry – which also faces ongoing cost pressures on materials and transportation - could not face a 10% tariff on Chinese-made goods. Thus the short answer to the issue would be to shift sourcing to other nearby countries.

But should the tariffs become a reality, this could be more painful than the shift with wooden bedroom furniture. Why? Simply put, other countries don't have the capacity of China to absorb all the extra production.

Consider that in 2017 China shipped $13.6 billion in furniture to the U.S. market. This compares to $3.8 billion from Vietnam and about $1.4 billion from Malaysia and Indonesia combined. Other countries such as Mexico and Taiwan shipped another $1.5 billion to the U.S. in 2017. Could these countries take on additional production? Most likely yes, as could India, which shipped about $316 million in furniture to the U.S. last year.

The question is which countries can equal China’s production capacity, manufacturing technology and overall infrastructure? That will be the question the industry will face if the tariffs take effect.

What does this mean to your business and how will your company address the issue?

7 of the Most Expensive Hotel Renovations Ever

A hotel renovation is a lot of work and money! Let JMC help you with yours. We'll do our best to keep the cost down while also providing excellent service.

TEXT BY STEFANIE WALDEK for ArchitecturalDigest.com. Posted July 2, 2018

Ever wonder how hotels keep up with emerging trends in both decor and technology? Well, it’s not really much of a surprise. They are constantly refreshing their properties, with small updates happening each year, and more substantial revamps occurring every seven to ten years on average. Then, once in a while, a hotel will undergo a massive renovation that often closes the property to business for years—and costs hundreds of millions of dollars. Here we take a look at seven hotel renovations that cost mind-boggling sums.

The Savoy, London: $350 Million

With a 128-year history, the Savoy is famous for a number of firsts: It was the first luxury hotel in Britain, the first hotel with electric elevators, and the first hotel to install telephones in every bathroom. It was also the first London hotel to have undergone a £220 million renovation (that’s approximately $350 million). The Savoy shut down in 2007 for the first time since it opened in 1889, reopening three years later with entirely refurbished interiors by designer Pierre-Yves Rochon, who maintained the hotel’s signature Edwardian and Art Deco influences.

JW Marriott Marco Island Beach Resort, Florida: $320 Million

In January 2017 the Marriott brand reopened the former Marco Island Marriott Beach Resort, Golf Club & Spa as a JW Marriott property—one of the luxury franchises within the hotel conglomerate’s portfolio. The hotel has been undergoing renovations since 2015, and though the property is currently open, the final phase, which will see the Lanai Tower (home to adults-only hotel rooms, a celebrity chef–helmed restaurant, a virtual entertainment center, and a meeting space) completed, is expected to wrap up this year.

The Watergate Hotel, Washington, D.C.: $200 Million

The infamous Watergate Hotel, opened in 1967, shuttered for nine years during its massive overhaul, opening in 2016 to much fanfare. Ron Arad spearheaded the new look of the hotel’s public spaces, which puts a contemporary touch on the hotel’s '60s-era vibe. You’ll find nods to the past in the staff’s uniforms, too, as Rakel Cohen, senior vice president of design and development at Euro Capital Properties (which restored the hotel), tapped Mad Men costume designer Janie Bryant to create them.

Belmond El Encanto, Santa Barbara, California: $134 Million

In one of the longer hotel renovations on our list, Belmond El Encanto spent seven years refurbishing its historic property, which originally opened in 1918 and debuted its newest look in 2013. Situated on a hilltop in Santa Barbara, the Spanish Colonial–style hotel comprises 92 guest bungalows (how California chic!), an indoor/outdoor restaurant, a lounge, and a spa. Over the course of its nearly century-long past, it’s been a hot spot for celebrities ranging from Clark Gable to Barbra Streisand.

Peninsula Beijing: $123 Million

The first Western luxury hotel to open in Beijing, in 1989, the Peninsula has been a key player in the city’s hotel scene for nearly three decades, and it just unveiled a $123 million makeover in April 2017. This wasn’t just a simple update to the hotel’s decor, either. The hotel downsized from 525 rooms to 230, meaning many have nearly doubled in size. (The smallest room is 650 square feet—the approximate size of an average one-bedroom apartment in Manhattan). The renovation also outfitted the hotel with new technology, from tablet-carrying staff that serve as a front desk/concierge combination to complete integration in the rooms, like a control panel that can be converted into multiple languages.

Atlantis, the Palm, Dubai: $100 Million

Though it was only constructed in 2008, the Atlantis, the Palm, resort is in the midst of a three-year, $100 million renovation that will see updates to each and every one of its 1,539 rooms. But, impressively, it will remain open the entire time. How? Only 50 rooms and suites will be renovated at a time, over the course of a six-week period. On top of the accommodations, several of the property’s 23 dining options will also be revamped. The entire renovation will be complete by 2019, just in time for the 2020 World Expo, which will be held in Dubai.

Raffles Hotel Singapore: ??

Singapore’s grand dame last underwent a major renovation in 1991, on which its owners spent S$160 million, or approximately $280 million, but it’s currently undergoing a new revamp that will see nearly the entire property upgraded, from the lighting on the building’s exterior to the landscaping to the addition of new buildings. Champalimaud is leading the interior renovation; they are no strangers to updating historic luxury hotels, working on the Hotel Bel-Air in Los Angeles and the Pierre in New York, among many others. Though Raffles won’t disclose the total sum of this renovation, we’ve confirmed that it’ll cost more than the previous renovation, earning the hotel a spot on this list.

 

Model Rooms - What, Why and How

We have worked on many model rooms here at JMC. This article is an excellent explanation of their purpose.

By Mark Trudeau for LinkedIn

As a kid growing up in Detroit, I was always building models of some kind- autos, airplanes, ships, model rockets and the like. This was in the days before Lego offered extreme modeling kits like the Star Wars Death Star or architectural models of the Eifel Tower and John Hancock Building.  Modeling was a big part of being a kid in the 1960's and 70's, and it was always a thrill for Dad to take me to the Ford design studios where I might catch a glimpse of new auto platforms being developed.  That's the world Dad worked in, but on weekends we would drive north to the lake house where we would experiment with 2x4's, 5 quarter rough sawn oak, brick, steel and glass in a continual effort to improve our summer get-a-way home.  Over the course of many years, what started out as a simple cabin became a resort style, year round home that can comfortable sleep 12!  

  A model room we installed in Arlington, Texas

A model room we installed in Arlington, Texas

Looking back, my experience with models has greatly shaped my attitudes toward the use of model rooms for new or planned renovations of hospitality properties; with recent experiences causing me to ponder why we in the hospitality industry place such a strong emphasis on model rooms, but then fail so often to use them properly.  Here then a few thoughts on the what, why and how of model rooms:

What is a Model Room?  Contrary to popular belief, a model room is not a set aside room to test the characteristics of a proposed new guest room or suite design- in fact, competent designers will have worked out the majority of the functional and design issues within the Schematic and Design Development processes.  I suggest the true purpose of the model room is to confirm the design solution while addressing possible construction, FF&E, use, and ongoing maintenance issues. To this end, confirmation of the rooms interior design should be the shortest part of a review as the arrangement and finishes have already satisfied the interior design and budget criteria set forth before the model room was constructed.  The real purpose of the model room becomes known during its construction and outfitting by the various trades engaged to create the approved design, and later as its tested for actual housekeeping and long-term maintenance.  Unfortunately, this is when the room is generally given its least attention and scrutiny. Just like building a model rocket as a kid, the construction had to be spot on and all the related details properly understood and addressed or, regardless how great the paint job was, it wouldn't fly or continue to fly after its maiden voyage.

A model room is a fully functioning room (or rooms, and may include a portion of the guest room corridor)-- everything works, and the room can be used just as a guest would in the finished property, and in many instances will be used and tested prior to actual rollout, to ensure the rooms features live up to the original criteria set forth for its design.  Once constructed, but prior to final testing and evaluations, the model room becomes a perfect example of the approved product, and may require slight modifications to address minor design, construction or maintenance issues.  Major changes implemented to model rooms are indications that the room design was not well conceived or the design was not well implemented, which makes the room less of a model, and more of an experiment.

Pulling the trigger on the construction of a model room, or set of rooms, as the case may be, is solid indicator that critical design and budget evaluations have been completed and the property is largely satisfied that the product will serve the needs for which it is intended.  In the case of separate property Ownership and Brand involvement, the design process, including execution of finished construction documents, FF&E specifications (including shop drawings), material sampling, and departmental reviews have all been concluded with approving results. 

  We installed this model room in Rosemont, Illinois

We installed this model room in Rosemont, Illinois

Why build a Model Room? Model rooms have a specific purpose, but not the one most industry professionals believe they have.  Recent experience suggests that model rooms are constructed to prove the design, but as noted previously, this is a wrong and expensive premise. Today 3D photorealistic modeling allows individuals outside the design process to visually step into and confirm the various design characteristics and amenities that are part of the interior solution.  CAD and actual product mock-ups of critical millwork or furniture components allow the designer to work through functional issues in the studio before these elements become a part of the final design.  And of course, finish, hardware and OS&E material samples are collected during the Design Development phase and are vetted for appropriate use, including budget and lead-time considerations. As previously noted, once the model room is constructed, the design solution should be almost perfect, the designers having considered and worked through both major and minor functional and aesthetic requirements.

  A super-hip model hotel room in the middle of the install we did San Diego, California

A super-hip model hotel room in the middle of the install we did San Diego, California

Following a successful design process, the model room is used to confirm construction and outfitting sequencing, identify possible construction and site related issues, understand the application of FF&E in the space--especially any wall mounted or semi-built-in components, and test the final product for long term maintenance and guest use.  It also becomes key to identifying possible budget related issues not always factored into, or considered during the design, construction, or outfitting process.  A few examples of these important considerations include a) the need to address specific utility placement/ interface to, or consider the impact of utility work in the room following outfitting of FF&E components, b) addressing millwork or FF&E component sizing relative to site related limitations- this includes more than checking the service elevator size to make sure large items fit, c) the opportunity to coordinate construction (site) and FF&E component (manufactured off site) blending details when the two elements come together in the finished room, and d) the opportunity to effectively communicate scope of work requirements with various trades/ vendors.  Other important considerations involve the long-term use and maintenance of room.

Once constructed, the model room provides the various project teams with a working example that can be referenced again and again and used for problem solving actions, should issues arise.  This is especially true for the General and Sub-trades building the space, FF&E purchasing agent, FF&E installer, and for the property/ brand when planning OS&E and training housekeeping, food & beverage and other guest services staff.

How to Build and Use a Model Room? 

I. Location and Site Conditions: Ideally, model rooms are constructed at the actual property and not in a remote location.  This is not always possible, especially for new ground-up properties, or properties undergoing extensive renovations. Having the model room close at hand, increases the effectiveness of the room as tool to be used and referenced. If the model room cannot be constructed on site, care should be taken to build the model as close to the physical property location as possible and to create as closely as possible, the conditions that will exist at the property-- wall framing should be the same method and materials, as will utility systems, ceiling heights are correct, as are doors and door hardware, etc., with special care given to site differences.  In one example, a service elevator at a remote location that was much larger than the elevators used on the actual site was temporarily framed out during the model room construction to mimic the elevator size the construction trades and FF&E installers would actually be working with. In another example where model rooms were constructed in a small warehouse, care was taken to simulate corridor lengths, widths and heights, including the flooring and wall finish materials for FF&E installation planning.

  We enjoyed  installing this luxurious model room in Dallas, Texas

We enjoyed  installing this luxurious model room in Dallas, Texas

II. Actual Products Used: During the model room construction process, care is always given to use the actual finish materials used in the room, but not always with FF&E products, which are sometimes fabricated by different vendors.  Its not unusual, largely due to cost, for FF&E to be fabricated by a local (to the property location) entity, while the rollout goods are made off shore in another country. This can prove disastrous, as was the case on a project in Chicago where stone clad FF&E products were made for a model room by a local (Chicago) millwork shop.  The actual product arriving from out of the country arrived with the stone separate of the finished wood products.  Costs to install the FF&E package greatly increased, while fit and finish were nowhere close to the millwork constructed product, which was the approved "solution".  As is the case with many larger projects, the finish materials are actually ordered and delivered to the construction site in lots to be used during the construction/ outfitting process, as this allows the various teams members to understand a products weight, type of storage required either on or off-site, sizing of packaging, which can impact movement and handling of the product at both the warehouse and facility, and of course how waste is to be treated.  

III. Audit the Construction Process: The construction process should be audited to track possible sequencing issues or uncover possible impacts on the design solution not recognized during the design process.  A recent example was placement of electrical behind large headboards--the electrical contractor required and was granted by the General Contractor, a range of placement options depending upon back to back guestroom electrical placement site conditions, and other in-wall obstacles.  The result was not all cords used for headboard lighting reached the intended electrical locations when the FF&E was installed resulting in installation delays and go-backs. Had the construction team and the design team been in sync during the model room buildout, its likely the cord length issue would have been caught and a major negative impact to the project never occurred.  In another example, black painted entry doors into guestrooms had to be re-finished several times due to poor construction installation sequencing which would have protected the fragile door finish. Floor finishes (mostly carpet & pad), fan coil trim out, and other minor construction detailing all took their tool with multiple sub-trades in and out of rooms for weeks after the doors were hung.

IV. Evaluate the Model for Use: The evaluation process involves more than acceptance of the rooms aesthetics.  Remember, form follows function!  When conducting model room evaluations, I always start with the Housekeeping staff and measure results- how difficult and thus how long to make up a room?  Has the design created areas where cleaning is not easy or efficient, or will require a custom or special cleaning tool?  Clean rooms are the result of access.  Limiting access to areas than need regular attention produces poor cleaning results, regardless of how dedicated and well trained the housekeeping staff may be.  I then bring in Maintenance to test simple to complex maintenance items--everything from replacing air filters and light bulbs to repainting ceilings, or replacing wallcovering. Furniture touch-up and servicing in-room appliances should also be considered.  It's especially critical to look at issues that are all too common in hotels of all service levels--clogged toilets and drains.  As room designs become increasingly complex and elevated in their level of finish and amenities, ongoing maintenance is a critical review component for mapping out a long term maintenance strategy.  Then there's the Room/ Guest Service staff/ operations. On a recent project, in-room dining was compromised by the size of the portable dining table given the rooms FF&E arrangement.  Comfortable two person in-room dining was next to impossible and had to be addressed.  Finally, simplicity of guest use should be reviewed. Many upscale properties are installing lighting control and even whole-room automated control systems.  Such trends are appealing, but not for everyone who can find the degree of technology incorporated into guest rooms to be overwhelming.  One of the chief complaints by guests to some of the newer properties recently opened is the lack of ease associated with room use.  I recently stayed at a high-end property that offered a narrow but deep shower in the bathroom.  The primary shower head was a rain head in the ceiling. Unfortunately, the shower control was placed deep inside the shower. For several mornings a rush of cold water literally rained down upon me every time I turned the shower on! Lastly, I bring in the luggage and test for ease of use getting into and out of the room.  This is especially true of resort properties where guest luggage use can significant in quantity and size.  Moving luggage in and out of a room, including temporary luggage storage in the room, impacts a room maintenance, its housekeeping, access by guest services, and guest comfort and satisfaction.

AV. Evaluate the Model for Cost Savings: Many complex hotel properties today vaunt large number of guest room types.  Personal experience has shown that many designers will identify differing room types by small, almost unnoticeable changes in FF&E selections or sizes.  Complexity in guest room types increases all costs associated with implementation and maintenance, and is not always necessary to deliver dynamic and impactful room design. Good design considers such. Great design seeks after simplification to drive costs down and increase guest satisfaction.  When evaluating a model room, ask the difficult questions as they relate to the project as a whole--was the rooms function, based on the criteria set forth by the Owner/ Brand effectively addressed? Are there ways to simplify the guest experience and in the process increase satisfaction? Are the dollars being spent, being spent in the right areas?  Again, I'm of the opinion that these questions should have been answered long before the model was constructed, but time and again, I see opportunities for cost savings and increased guest satisfaction after the design has been finalized and the model is being evaluated.

To conclude, it costs much less to work out the design on paper than it does in the field.  A model room should never be used to prove a conceptualized design, but is an effective tool for working through a range of related concerns, especially on the construction front.  When built, the model should confirm the designs functions and aspirations, not pave the way for extensive alterations or new concepts.

Holidays in Asia

Please be aware the following holidays may affect shipping schedules. Contact your JMC project manager for more details.

Taiwan & China - June 16-18 (Dragon Boat Festival)
Hong Kong - June 18 (Dragon Boat Festival)
Malaysia - June 15-16 (Muslim New Year)
Jakarta - June 14-18 (Eid Al Fitri 1439H Holidays)
Singapore - June 15 (Hari Raya Puasa Holiday)

Upcoming Holidays in ASIA

Please be advised of the following holidays in Asia, and plan your shipments accordingly. Contact your JMC project manager if you have any questions.

MAY 1: Labor Day
 - China
 - Taiwan
 - Hong Kong
 - Vietnam
 - Indonesia
 - Singapore

MAY 10: Ascension Day of Jesus Christ
 - Indonesia

MAY 22: Birthday of Buddha
 - Hong Kong

MAY 29: Vesak Day
 - Indonesia

Why Can’t I Catch a Break on Shipments to Hawaii?

   The Port of Honolulu. Can you find the ship in the harbor?

The Port of Honolulu. Can you find the ship in the harbor?

Because “The Jones Act” fosters lack of competition and one-way trade.

This arcane law requires that waterborne shipments between two points within the United States be carried by vessels that are made in America and crewed by Americans. This protectionist bill, officially known as “The Merchant Marine Act of 1920”, was intended to protect American ship builders, but its major impact has been to make EVERYTHING in Hawaii much more expensive! Unlike competitive sea lanes worldwide, Hawaii has only two USA-flagged carriers, and since ships head back to the Mainland almost empty, the full costs must be absorbed by shippers to Hawaii. The law also affects Puerto Rico and Alaska.

Good news: JMC’s expert project managers have decades of experience managing FF&E projects in Hawaii. Yes, it’s more complex, but that’s what we’re here for – to deliver on your promise!

For more info:
http://www.grassrootinstitute.org/2017/04/the-jones-act-in-perspective/

Coming up next: Damaged Freight Claims - how to prevent them when you can and resolve them when they occur...