UPS Freight approve new labor contract, avoid strike

by Ben Tobin for USA TODAY Published 8:19 a.m. ET Nov. 12, 2018

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UPS Freight workers voted to approve a new labor contract, averting a potential strike that could have affected the shipment of packages across the country.

Though workers rejected the initial offer in October, the second round of negotiations — which included raising wages and limiting the amount of subcontracted work — proved more successful.

A total of 77 percent of workers approved the contract at local union meetings held between November 7 and 11, with 84 percent of eligible members voting, according to the Teamsters union.

The agreement covers approximately 11,600 workers.

"Our teams began contacting customers immediately after ratification," UPS said in a statement Sunday. "We thank our customers for their patience and loyalty."

19 decommissioned shipping containers become downtown Phoenix’s hottest marketplace

 All photos courtesy of the designer

All photos courtesy of the designer

from Building Design + Construction

JMC uses shipping containers every day. But what happens to those containers when they're no longer being used for their original purpose? The 14,000-sf urban infill development in Phoenix, Arizona, The Churchill, is the latest in a neighborhood meant to be constructed entirely from shipping containers.

September 1 marked the opening of downtown Phoenix’s newest restaurant and retail marketplace—and its latest commercial construction project to utilize decommissioned shipping containers as its primarily building form. The Churchill is a 14,000-sf urban infill development that caters to small Arizona-based businesses. 

The development is the latest in a neighborhood to be constructed entirely from shipping containers, and the third shipping container project delivered by Phoenix-based design-build firm Local Studio. 

The Churchill, located at 901 N. 1st Street, is comprised of 19 containers. Each maintains its original doors and wood floors, and parts of the containers were used to build the upstairs deck. The center courtyard is covered and cooled with evaporative coolers and large fans. Handcrafted tables and seats maintain the theme and were constructed with refurbished wood shipping pallets.

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“We saw The Churchill as an opportunity for placemaking in our own neighborhood,” said Local Studio Founder Brian Stark. “It’s an unexpected place that will bring people together to meet, eat, shop, and share experiences—and we wanted the structure itself to reflect that sense of community.”

The centerpiece of the development is 30-foot-tall steel container sculpture created by Phoenix artist Pete Deise. The container is propped up vertically on the southwest corner of the complex and features a paper-cutout aesthetic to expose the interior of the box. 

Stark says container-based construction is not just about aesthetics. He says the steel corrugated boxes are more durable than common building materials, and structures made with containers can be erected in half the time. 

“Using shipping containers is more than a trend—it’s been popular in Europe for decades,” said Stark. “These projects are built quickly, sustainably, and bring an authenticity to a neighborhood. Other cities are looking to Phoenix as a model for how to adapt their building codes to attract container projects.”

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FedEx hikes 2019 shipping rates, boosts fees on 56 accessorial services

by Mark Solomon, Managing Editor, Markets for FreightWaves, on November 05, 2018

FedEx Corp. (NYSE: FDX) said today it impose low to mid-range general rate increases for 2019 on its U.S. domestic shipping services and will also increase its fees on 56 “accessorials,” services that go beyond a traditional line-haul move.

Effective Jan. 7, so-called list rates for FedEx Express and FedEx Ground services will rise 4.9 percent, while prices for shipments moving via its less-than-truckload unit, FedEx Freight, will climb by 5.9 percent. For shipments moving via FedEx Express, the company’s air and international unit, the increases will apply to domestic U.S., U.S. import, and U.S. export services. 

Rates for shipments moving via “SmartPost,” a partnership with the U.S. Postal Service where FedEx shipments are inducted deep into the postal delivery network for last-mile deliveries to residences, will also increase, FedEx said. The company did not disclose the magnitude of SmartPost increases in today’s announcement. Rival UPS Inc.—which has yet to disclose its 2019 rate adjustments—has a similar relationship with the Post Office. USPS, which calls its service “Parcel Select,” performs the same function for various partners such as parcel consolidators. 

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The service is popular with businesses and providers because it is priced cheaply and because it relies on USPS’ universal service network, partners can offer last-mile deliveries without using their own assets.

The rate increases apply to shipments not moving under contract with FedEx. The impending list price increases are consistent with the increases taken in recent years. Contract rates fluctuate in a narrower band as big customers leverage their volumes to mitigate any increases. The higher LTL rates reflect the continued strong pricing power exhibited by carriers across the board.

Also on Jan. 7, fees will rise on 36 accessorial services imposed by FedEx Express and FedEx Ground, and an additional 20 at FedEx Freight. For example, FedEx Express and Ground will hike a surcharge for “additional handling’ to $13.50 from $12.00 per package, based on its dimensions. The charge for address corrections performed by either of the two units will increase by $1 per transaction to $16.

Although the individual increases are minor, their cumulative impact can become costly, and are treated by regular customers as a nuisance and an inconvenience. The number of accessorial fees imposed by FedEx and UPS have risen consIndividually over the year.

For the second straight year, FedEx will not impose per-package residential delivery charges on traffic moved during the peak shipping season, which at FedEx begins Nov. 19. FedEx will apply a $3.20 surcharge to U.S. express and U.S. and international ground shipments that require additional handling, a $150 per-package surcharge on "unauthorized" packages, or shipments with such outsized weight or dimensions that the company may refuse to handle them, and a $27.50 per package surcharge on “oversize” packages, items not as outsized and somewhat easier for the FedEx system to handle. The company imposed surcharges on the same services during the last peak.

The “unauthorized package” surcharge comes in the wake of a $300 increase in charge for the service during the 2017 peak cycle.

Last year, Memphis-based FedEx chose not to impose any surcharges on the standard small-parcel deliveries its infrastructure is essentially built to handle. Instead, it focused on "large format" items that are not conveyable, may require extra or special handling, or both. Delivery demand for those items is rising rapidly as retailers expand the stock-keeping units available for online purchases. As a result, FedEx was able to capture increased ancillary revenue from moving the large-format traffic

UPS FACES POSSIBLE STRIKE AS TEAMSTERS EYE VOTE NEXT WEEK

by APARNA NARAYANAN on 11/02/2018 for Investor’s Business Daily

UPS (UPS) faces a potential job action in its industrial trucking unit, though a UPS strike would affect shipping customers — not homes and businesses — who have been told to make alternative plans ahead of a union workers' contract vote next week.

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UPS Freight workers nixed a tentative contract in October and are set to vote on updated terms, the Wall Street Journal reported late Thursday. With a contract extension set to expire Nov. 12, the delivery giant faces the prospect of 11,000 Teamsters members going on strike.

It would be the first work stoppage at UPS since 1997. The freight division ships heavier goods and bulk shipments, including to retail stores.

The company told customers it will stop picking up heavy shipments Wednesday. It also said it can only guarantee ground shipments through Thursday. A spokesman said UPS "cannot afford to put our customers' volume at risk of being stranded in our system."

Residential and business customers won't be affected by the potential UPS strike.

Workers in the division that delivers packages to homes and businesses ratified their tentative contract last month.

For UPS, the strike comes at a particularly tough time. Besides the upcoming holiday season, delivery and trucking companies confront tight capacity and a driver shortage as volumes surge in a robust economy.

Shippers respond to volatile market by increasing lead times in the second half of the year

by Zach Strickland on November 03, 2018 for FreightWaves

Shippers combated higher rates and lower capacity this year by increasing their lead times on their orders by 3% according to the Tender Lead Time Index. It is widely documented that shippers incurred some of the largest increases in the past 20 years on their freight costs. Companies like General Mills and Pepsi citing increasing transportation costs as reasons for missing earnings targets in 2018.

ELD implementation, hurricanes, and a booming industrial economy all contributed to the perfect storm for reducing capacity in the U.S. in the past two years. One of the simplest ways to mitigate this albeit not always possible is to secure capacity earlier in the shipping cycle.

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It is not always easy to extend lead times. Production cycles vary, and it is difficult for carriers to pre-plan much more than two to three days in advance due to things like weather events, traffic, and delays at shippers. Depending on the product’s position on the supply chain, pre-production or post production, shippers see orders as far out as 21 days and can forecast weeks in advance when their freight is going to be ready to ship. Three weeks is too long to secure capacity for either party but adding a day or two can make a big difference when you can do so.

The average lead time from February through June was 2.57 days. From July through October lead times are averaging 2.65 days. This does not seem like a large jump as an absolute change, but it is a clear shift in behavior, looking at the chart. The increase in average lead time is clearly a long run change in behavior as opposed to a few short-lived extreme increases.

The increase in national lead time average is a sign that shippers are attempting to understand how they can work with carriers to lower their costs. This is a large shift in dynamic from previous years where the shipper held carriers hostage for price and service without much thought for what they could do to work with the carrier to lower these costs.

One other tool of tender lead time is for undertanding how much freight is handled in the spot market vs. contract market. Shorter lead times suggest that shippers are scrambling for more capacity, rather than being able to go to their routing guide on a consistent basis. Under the current market conditions, with tender lead times increasing, we are seeing less freight enter the spot market. Freight brokers and companies that operate primarily in the spot market, want to see shorter lead times. Shorter lead times mean more capacity volatility and thus higher rates.

(SONAR: TLT.USA)Tender Lead Time - USA. Tender Lead Time is the average number of days between load request date and requested pickup date. Longer lead times tend to lead to decrease tender rejection rates. From an analytical standpoint rapidly decreasing lead times can indicate unexpected surges of volume. When lead times decrease slowly it is an indication that capacity is prevalent as shippers are having little trouble securing trucks. Increasing lead times can mean shippers are having trouble securing trucks.

THE VERY REAL POSSIBILITY OF A UPS STRIKE

From Intelligent Audit:

As we’ve reported on several occasions over the last month, UPS management, the rank and file members, and the Teamsters leadership are embroiled in a contract dispute that has gone from bad to worse. 

While most experts thought the contract negotiations would be difficult, the possibility of a labor strike, especially right before peak season, was not on the table. 

But here we are. 

It seems that UPS is now preparing for the very real possibility that union members will go on strike in November. 

Here’s a recap of how we got to this point:

  1. May 2018: News begins to surface regarding the on-going negotiations between the Teamsters union and UPS. It becomes clear that there is a clear rift between Teamsters management and the rank and file members of the union regarding certain aspects of the contract. The new deal includes provisions for a two-tiered structure for drivers’ wages, effectively inhibiting full-time workers from making getting the same kind of overtime pay for weekend deliveries as they had previously.

  2. June 2018: It is reported that the Teamsters Union management agreed, in principle to the new contract. While it still required a “yes” vote from the membership, the management felt that they would be able to get the vote through

  3. October 2018: The vote did not go as planned; of the members who did vote, 54% voted “no” on the proposed contract. However, the union requires at least a 2/3 majority vote “no” if less than 50% of members vote, a threshold that was not met. As a result, the agreement was put into a state of limbo and the existing contract was extended in order to give the union more time.

  4. November 2018: As the November deadline approaches, there is little indication that union members and leadership are finding a way forward. Preparations are being put in a place for a strike after the mid-November vote.

We are now learning that UPS is, in fact, preparing for the worst. 

As of November 1st, UPS will not be picking up any freight volume that is set to be delivered after November 8th. This is due to the fact that, as of now, there is no extension to the existing freight contract in place. 

UPS is being “proactive” with customers to ensure that their freight does not get stuck on a truck during the potential strike. 

It seems UPS believes there is a very real possibility of a strike after the vote.

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East coast containers running at a discount due to overwhelmed west coast ships

October 27, 2018, by Zach Strickland for FreightWaves.com

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Last week the major west coast ports of Los Angeles and Long Beach reported all-time high volume for the month of September. With tariffs on Chinese goods increasing on January 1st from 10% to 25%, supply chain managers across the country have been trying to get as much inventory into their warehouses as possible. Possibly the most interesting price activity resulting from this is the decreasing “Panama Spread” value (FBX.PANA), the cost differential between shipping a 40-foot container from China to the North American West Coast (FBX.CNAW) versus the North American East Coast (FBX.CNAE).

This past week the Panama Spread dropped from $1,126 to $856, a 24% drop. Rates to the west coast are increasing while the rates to the east coast are decreasing. With the Savannah and Charleston ports reporting 9% and 10% increases in YOY volume respectively, one might wonder why this is happening.

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Many of the maritime carriers reduced capacity on transpacific lanes in August and early September in preparation for reduced volume resulting from tariff concerns. The tariffs have effectively split peak maritime shipping season in two. The result has been limited capacity going to the western ports this fall. Whether or not this was planned to be a way to increase rates and take advantage of the geopolitical situation is unclear.

The good news for the importers is that the maritime carriers are offering discounts to the east coast where capacity is more available. This is why we see rates declining in those lanes on the spot market.

Importers need a lot more time to adjust their supply chain dynamics than the maritime carriers need to alter their capacity on the water. Carriers may have anticipated a more rapid change in behavior than has occurred. In the near-term importers have been bringing in as much freight as possible while they try to figure out the long-term impact of increasing tariffs.

UPDATE ON TYPHOON YUTU

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Typhoon Yutu only brought tropical storm weather conditions to Guam. Unfortunately, the island of Saipan suffered a direct hit with the eye of the storm passing over the island with sustained winds of 185 mph. Services to Saipan will be suspended until authorities are able to assess damage and reopen the Saipan Port. All scheduled Saipan deliveries will be postponed until the roads have been cleared and businesses are able to accept deliveries. Judging by the amount of damage Saipan experienced, we believe it could take a substantial amount of time for Saipan to get back up and running. Our thoughts for a rapid return to normalcy are with the Saipanese!

Trucking congestion must also be addressed by ports: Oakland is doing its best

By Patrick Burnson, Executive Editor of Logistics Management · October 22, 2018

Monday-through-Thursday second shift should ease crowds, move cargo quicker. But will shippers pay?

As noted in this space last week truck congestion on the nation’s highways remains concern for the American Trucking Association. Gridlock at the nation’s ports is also a critical piece of this problem.

But creative solutions are being employed at the Port of Oakland this week as TraPac marine terminal introduces full service night gates for harbor truckers.  

The move to expand beyond traditional daylight hours is intended to ease daytime crowding and accelerate containerized cargo deliveries.

“This is another significant step in Oakland’s operational transformation over the last two years,” said the port’s communications director, Mike Zampa in an interview. “The terminals responsible for the vast majority of the port’s cargo now operate two shifts to combat truck queues and cargo delays.”

TraPac, Oakland’s second-largest terminal, said today it will operate night gates for freight haulers every Monday-through-Thursday.  Drivers can pick up or drop off cargo from 6 p.m. to 3 a.m., TraPac said.  Daytime hours – 7 a.m. to 6 p.m. - remain unchanged, the terminal added.  

The move replaces twice-a-week night gates at TraPac that offered only limited transactions for freight haulers. The terminal said truckers may now deliver export containers, collect imports and pick-up empty containers or container chassis.

“We are getting ahead of the demand,” said TraPac Operations Vice President Brian Bauer.  “Drivers, cargo owners and carriers associated with TraPac will see improved performance and know we are ready for growth.”

TraPac becomes the second marine terminal in Oakland to open at night for harbor truckers.  Oakland International Container Terminal introduced extended hours two years ago.  That terminal has reported reduced congestion and improved transaction times since adding a second shift.

TraPac said freight haulers should be able to complete transactions quickly at night because traffic is lighter.  The terminal added that daytime truck queues should shrink as a portion of volume will shift to nights.

The terminal issued the following guidelines for its night gate program:

Drivers will be able to pick up or drop off import, export and empty containers.
Through Oct. 26, TraPac will require appointments to pick up imports; beginning Oct. 29, appointments will be required for imports, exports and the return of empty containers.  Appointments won’t be needed to pick up empty containers.  
TraPac will assess a $30 fee on all loaded containers during day and night shifts starting Oct. 29 to defray the cost of extended operating hours.  Loaded containers leaving the terminal via rail won’t be assessed a fee.

As reported earlier in LM, night gates are the latest in a series of 2018 changes at TraPac in Oakland.  

We noted then that the terminal opened a new entrance gate complex for harbor truckers.  Next month, TraPac will complete a two-year expansion to double the size of its Oakland footprint.

The one question remaining, however, is how shippers will react to higher fees. 

THE IMPACT OF THE TRUMP TARIFFS ON THE FF&E INDUSTRY

by Kevin Williams, Director at JMC Global  

Let’s start with a quick recap of what has changed over the past six months, then look forward to 2019.

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  1. Trump announced a "Trade Policy Agenda" intended to benefit US workers and companies in February 2018. He called for a re-negotiated NAFTA and a “Section 301” investigation into Chinese practices, related to forced technology transfer, unfair licensing, and intellectual property policies and practices. Subsequent announcements threatened to impose tariffs on Chinese goods unless an agreement with China was reached.

  2. A 10% additional tariff was imposed – including Furniture Starting September 24, 2018, US Customs began collecting an additional 10% tariff on $200 billion worth of Chinese-origin imports, including most furniture products.

  3. Increased bonds required of importers Many importers have been forced to increase the level of the bonds they maintain with US Customs (CBP). Required bond amounts are often 10% of the projected amount of annual duties, taxes and fees the importer of record pays to CBP each year. Since many tariffs on furniture were ZERO, these new requirements are 20 to 100 times what they were, creating confusion and a burden om many small importers.

  4. Stronger US dollar buys more abroad Financial impact of these 10% tariffs has been offset by currency strengthening. The USD has strengthened in value over past 6 months, up 10% in value vs Chinese Yuan/Renmibi (CNY) – from 6.31 CNY on 4/9/18 up to 6.92 on 10/10/18.

  5. 25% tariffs on the horizon Unless a trade deal between USA and China is reached soon, these tariffs will rise another 15% (up to 25% total) as of Jan 1, 2019.

  6. Peak Season Congestion = Longer & Tighter than Ever! Net effect of all this tariff uncertainty has been importers rushing to accelerate all their material on order, trying to arrive before these higher tariffs begin. Result has been that “Peak Season” has started sooner and is going longer and stronger than ever, with major congestion and delays in China and vessels fully booked up for weeks / months.

  7. Shortage of US Trucking Nationwide, carriers are reporting increased “Load to truck ratios” and a growing shortage of drivers. Thus, rates have risen (2% per month!) and LTL carriers are packed, causing customer service issues.

  8. NAFTA 2.0 On September 30, USA announced that a new trade agreement (USMCA) had been reached with Canada and Mexico. In 2017, Mexico exported $1.14b of furniture to USA, and this is expected to more than double in the future.

  9. Global Oil prices reach 4 year highs and even higher in foreign currencies. This has caused a significant increase in costs for all modes of transportation – ocean, rail, trucks, and air.

  10. GDP Rising, Unemployment Rate Falling US unemployment rates have reached 50 year lows, as the strengthening economy is putting millions back to work. Wages are rising and companies doing more to retain current staff and recruit new employees. The economy continues to grow: GDP growth hit 4.1% for Q2 of 2018. 

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Here’s the outlook over the next 6-12 months:

  1. The hospitality industry will continue its strong growth trend, with expectations of 5% growth in new projects in 2019 and 2020.

  2. Tariffs will rise to 25% starting January 1, 2019, impacting budgets everywhere.

  3. Oil prices are projected to continue to rise – up to $100/bbl by 2019. The impact here will be rising transportation rates (or at least sustaining them at the Peak Season levels).

  4. Expect a rapid growth in sourcing outside of China, where furniture manufacturers are already experiencing RECORD SALES, and they are expanding their production capability as quickly as they can. Alternative countries include Vietnam, Indonesia, Malaysia, India, Brazil and Mexico. However, China still has a 55% market share ($13.7b in 2017), more than all other countries combined. Thus, Chinese factories will continue to manufacture the majority of furniture for some time to come. Which leads to point 5…

  5. Cheating will increase. Some competitors will try to avoid tariffs by mis-labeling their goods, either hiding their Chinese origins or re-classifying them under a different harmonized code number. The Wall Street Journal wrote an excellent piece on this (email Kevinw@JMCgl.com if you can’t access the full story behind their paywall).

  6. Want more insights? Check out this excellent piece by Thomas Russel, Editor at Furniture Today – titled: “Global Sourcing: What’s the Next Move?

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STORM WATCH: HURRICANE MICHAEL IS MAKING LANDFALL

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Hurricane Michael is coming ashore now - at Panama City, Florida - as a 150 mph Category 4 hurricane. This storm is potentially catastrophic; if Michael reaches the coast with top winds of at least 130 mph (minimal Category 4 strength), it will be the strongest hurricane landfall ever recorded in the Florida Panhandle, as well as along most of Florida's Gulf Coast — all the way from the Alabama border to Punta Gorda — in records going back to 1851. PLEASE be safe.

Michael's track will take it up through Georgia, near Atlanta, then it will veer off to the North East. Highways impacted include I-10, I-20, and I-85 & I-95. Operations will likely be impacted throughout its path. Again, PLEASE be safe.

In Its Teenage Years, Montage Is Going On A Growth Spurt

by Doug Gollan, a Contributor, for Forbes.com

In a private dining room at The Bellagio Resort in Las Vegas during August when many CEOs would rather be on vacation somewhere that the outside temperature is not 115 degrees, Alan Fuerstman was clicking through slides of his hotels, recently opened ones, locations about to open, some of his classics, and the pipeline of projects for his two luxury brands, Montage Hotels & Resorts and Pendry Hotels. It's something the founder, chairman, and CEO of Montage International has been doing for three straight days every August since 2003 and apparently enjoys immensely. The adoring audience for the presentation is top producing travel advisors from the Virtuoso network attending their annual conference.

As images of hotels and resorts in Los Cabos, San Diego, Kapalua, Laguna Beach, Beverly Hills, South Carolina, Baltimore, New York City, the New Jersey countryside, Sonoma and Montana roll by one of my tablemates says under her breath, “It gets longer every year,” creating a few laughs, but not enough to stop the proud boss and the company's largest shareholder. After a few more clicks one of his colleagues gets up and whispers to him, causing a pause. Fuerstman then stops to tell the advisors, some of what he is showing them are projects that haven’t been officially announced, but since he considers the agents part of the Montage family, he is going to show a few more, but please don’t post anything about them…yet.

If it seems more like one of those gatherings where your favorite uncle is showing home movies from his most recent road trip across America, it’s not an accident. Most of the group have known each other for decades. Much of the management team at Montage has been there from the beginning or just about, including Fuerstman’s son Michael who serves as co-founder and creative director at Pendry. Fuerstman jokes to the audience that his scion's entrée into hospitality started a few hundred feet away as a lifeguard at the Bellagio’s pool back when dad was the vice president of operations here.

Things are changing, however. Montage entered its teen years with just three hotels, Laguna Beach, Deer Valley, and Beverly Hills, and a single brand. Earlier this year it celebrated its 15th anniversary by opening a stunning resort in Los Cabos that brings the current count to eight open properties. By the time the group turns 21, there should another seven or eight venues, possibly more, based on Fuerstman’s slide show.

The growth comes against a backdrop when many were wondering if smaller luxury groups could survive in a world where the big players were getting bigger. Over the past several years, Marriott International added The Luxury Collection, St. Regis and W Hotels to its own The Ritz-Carlton, Bulgari, Autograph Collection, Edition, Reserve and JW Marriott brands. France’s Accor picked up Fairmont, Raffles, Swissotel, Onefinestay and an interest in Banyan Tree and SLS parent SBE in addition to its Sofitel, Legend, M Gallery and SO flags. U.K.-based behemoth IHG has been moving away from its core of Holiday Inn and Intercontinental business hotels bulking up with Kimpton and Regent. Not to be left out, Hyatt recently signed a partnership with Small Luxury Hotels and is pushing its Andaz brand into the 5-star segment alongside Park Hyatt and Grand Hyatt.

Most luxury hotels aren’t owned in any significant way if at all by the companies whose signs you see on the door, so growth is based on top brass making a constant stream of presentations to developers and financiers working to get deals to manage hotels either as a new build or conversions.

“For a hotel owner, you select a management company for their expertise, but also for distribution, their ability to make technology investments for the future, research into consumer trends, loyalty programs that drive the types of business you need, buying power for everything for refrigeration units to paper towels and so on. The bigger the company, the more scale, so scale is a very powerful proposition for an owner,” says one hotel executive I talked to, adding, “When you see a small group with a big pipeline of management contracts, it’s saying that owners are rating management, operations and the product they are delivering at a level that offsets the disadvantages of being small.”

And perhaps that’s the point. Both the owners who hire Montage to manage their hotels and the travel advisors who recommend them to their well-heeled clients are buying into the Fuerstman’s vision, with Montage the idea that the highest level of luxury service can be delivered in a modern way, localized to California Cool or Southern Charm. With its second brand, Pendry, the company wanted to prove that you could have trendy lifestyle hotel and a bit of a party scene but with the same attention to pleasing the guest as at the mother brand.

"Alan and his executive team have elevated (Montage) to the top of the luxury hotel market. My clients love staying at their properties and are always wanting to try another hotel within the brand," says Anne Morgan Scully, president of McCabe World Travel, adding, "Their newest brand Pendry is attracting their own following and has one of the most forward-thinking hotel designs in today's hotel market They are creating great public spaces that are cutting edge, fun and the place where clients want to be seen. Alan has the golden touch on delivering hotel brands that are sought after by clients looking for excellence in hotel satisfaction."

Nancy Strong, the CEO of Strong Travel Services says, "Montage is an intelligent brand with a true vision of the future independent traveler.  Their ability to understand the needs of the luxury traveler is the secret sauce of their success."

With rates at some of its Montage hotels that can start in the high hundreds of dollars per night and go up from there, Fuerstman acknowledges as the luxury market buoyed by the strong economy stretches to see how far it can increase pricing, the pressure is greater than ever to deliver that perfect stay. He says the company has been preparing for its expansion and maintaining its uber-luxury service by doubling down on investments in training and bulking up its executive team. Interspersed with company veterans are newcomers recruited from Marriott, Hilton, Hyatt, Rosewood, and Viceroy.

Lindsey Ueberroth, the CEO of Preferred Hotels & Resorts, a marketing group which represents over 650 luxury hotels in 85 countries visited Montage Los Cabos over the summer. She says in addition to being impressed with the hard product, including the space and finishes of even entry level rooms, the service delivery was already in full gear, something most experts believe takes at least a year to nail at the high end of luxury.

When after the lunch in Las Vegas I told Chris Hamaway, the group’s senior vice president of sales and marketing that Montage reminded me of Ritz-Carlton in the early years under its legendary founder Horst Schulze, he replied, “Horst hired me in 1999 and to this day many of the things he said in those first few years resonate. We try to be humble, keep our head down, and take care of the guests.”

While for now, Los Cabos is the only international destination in its portfolio and Maui is its furthest afield, looking at its future map highlights that even if you are super rich, you won’t have to travel to another continent for an interesting luxury experience. Last year the company broke ground on a Montage and Pendry in the picturesque California desert at La Quinta. In January, it signed a deal to build the Montage Healdsburg on 258 acres in Northern California's wine country due in 2020 featuring 130 bungalow-style accommodations.

Last month, the news was Montage Big Sky, which is set to open in 2021 less than one hour from the Bozeman Yellowstone International Airport and only 45-minutes from Yellowstone National Park. With a mountain modern design with aesthetics inspired by the natural setting, the $400 million resort will feature 150 guestrooms and suites and 39 Montage Residences. Resort amenities include a three-meal restaurant, lobby bar, and lounge, market, pub and recreation room with a bowling alley, indoor lap pool, family swimming pool, fitness center, Spa Montage, and 12,870 square feet of meeting and event space. The resort will feature ski-in, ski-out access to Big Sky Resort’s 5,800 skiable acres and access to Spanish Peaks Mountain Club’s 18-hole Tom Weiskopf-designed golf course.

Scheduled for 2020, Pendry Natirar in the rolling hills of New Jersey’s Somerset County about an hour from Manhattan will use a 33,000 square foot Tudor-style mansion formerly owned by the King of Morocco as the focal point for an adjoining hotel with 66 guest rooms and suites. In addition to residences for sale that will range up to 4,000 square feet, there will be over 13,000 square feet of meeting space that will make the resort a prime destination for executive meetings as well as family celebrations.

Stacy Small, CEO of Elite Travel International says, "I feel like I was on the ground floor and since (its first property in) Laguna Beach, I couldn’t wait to see what’s next. They’ve been true to what they said they were going to do. They’re not just going into the traditional markets everyone else is, and that’s good for me because clients always want new places."

Perhaps the most important of Montage’s recent spurt of announced announcements was its June deal to open the 164-room Pendry Manhattan West hotel in 2021 as part of an eight-acre shopping, residential and office complex that already has signed up Accenture, Amazon, Ernst & Young, J.P. Morgan Chase and the National Hockey League as tenants. The development is well situated adjacent to the ongoing $25 billion Hudson Yards project and Penn Station redevelopment which will change the face of one of the city’s last grimy areas. It’s also a significant win when one considers the list of luxury hotel groups that have had New York on their wish list for years and decades. There are more projects in the pipeline that we’ve heard about and actually seen, however, you’ll have to wait. Either way, as Montage matures from teenager to full-fledged adult, if Fuerstman's slideshow is any indication, the best is yet to come.

Swiss village of Corippo to be turned into big hotel

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By Maureen O'Hare for CNN

The tiny mountain village of Corippo, arranged higgledy-piggledy on the green slopes of southern Switzerland's Verzasca valley, looks like something out of a fairytale. 

But here, in what is Switzerland's smallest municipality, the citizens are facing a harsh reality. 

What was once a thriving farming community of around 300 people has dwindled to just 12 residents, 11 of whom are over 65. Today, the only economic activity in the town is the local osteria, a rustic restaurant. 

Here, in the Italian-speaking part of Switzerland, not far from Lacarno, Corippo's slate-roofed buildings, built from local Ticino granite, have remained largely untouched for centuries -- but it's now on the verge of becoming a ghost town. 

Scattered hotel

However, all's not lost. A local foundation, Fondazione Corippo 1975, has come up with a novel way to save the village: Corippo is set to become the country's first "albergo diffuso," or scattered hotel

Borrowing a model that's already proven successful in Italy, around 30 of the village's 70 buildings -- slate-roofed, built from local Ticino granite, and centuries-old -- are to to be converted into vacation cottages and hotel rooms. 

It will, says Fabio Giacomazzi, an architect and president of the foundation, give visitors "the chance to experience a very particular sojourn in a genuine rural village that remained practically the same since 1800."

Aside from soaking up the atmosphere of an authentic Ticino village, guests will also be able to hike through the region, visit cultural sites and enjoy the local gastronomy. 

Open for business

"The idea emerged in the '90s," says Giacomazzi. "The original idea to bring back permanent inhabitants was [no longer] feasible, because the buildings are too small and not directly inaccessible by car." 

And now, finally, things are starting to happen. The first cottage, the two-bedroom Casa Arcotti, opened to guests in late July 2018, while the hotel proper is scheduled to open Easter 2020. 

The full three-stage restoration plan -- which comes with a price tag of around $6.5 million -- would see the osteria expanded and refurbished, in order to become not only the hotel's dining room but also a reception and meeting point. 

The public squares in front of the town hall and church are to become open-air communal spaces, while a mill, a bakery and a chestnut-drying room are also slated for renovation. 

There are also plans for landscaping, and the reintroduction of goat farming, as well as rye, hemp and chestnut trees. 

What next?

The project is not yet fully funded, although the New York Times reported in August 2018 that $2.7 million had been raised so far, through public funding as well as bank loans. 

There's been a lot of international interest in the project, with visitors keen to immerse themselves in Swiss village life. And in 2017, the project won the Swiss hotel and restaurant association Gastrosuisse's Hotel Innovation Award. 

However, there are some question marks as to the feasibility of the project. 

With such a small, aging population, there are relatively few people available to greet the visiting tourists. Concerns have been expressed about whether efforts should be focused on fixing infrastructure issues like poor water supply instead of attracting travelers. 

Giacomazzi says the hotel concept could boost resident numbers. 

"We hope that the hotel will offer the opportunity for a young family to undertake the management and to settle in Corippo together with some employees," he says. 

The plan is also to attract craft traders to the area, to further revitalize the village.

6 Free Activities Concierges Always Recommend

By: Mackenzie Dunn for Domino.com

Have you ever used a hotel concierge? They’re actually quite wonderful. Too often, while traveling, we rely on recommendations from friends, Google, Yelp, or our favorite travel blogs, without taking advantage of the very people whose job entails helping patrons find the very best things to do while on vacation. Note to self: Use the hotel concierge service more often.

These hotel staff members know the area around their establishment like the back of their hand, so their recommendations are quite valuable. And forget what you knew about concierges, they’re not just for the rich and famous looking to live the luxe life. You can often use their services without spending a dime, and they can recommend a ton of free activities, too. In fact, using concierges is a great way to save money during your stay. Some will even create a custom itinerary for you based on the highlights you definitely don’t want to miss out on, From the activities included in your hotel stay to those in the area that won’t cost a thing, we asked a few hotel concierges what their favorite free attractions were around their establishments. Though some of their top picks are location-specific, keep in mind that many of these destinations have similar activities to offer—so when in doubt, just ask! Just take it from NYC-based concierge Patrick Trevor, who says, “Always make sure you wander because you may stumble upon some secret gems.”

Learn about local history and culture

Many of our concierge experts love to recommend free cultural experiences that guests can take to get to know a bit about the history of their surroundings. If you’re visiting somewhere totally new, this can be a great opportunity to get to know the city’s backstory or immerse yourself into a bit of its cultural history.

For example, places like Philadelphia and Portland have free entry to the Museum of Art, according to the concierges at The Logan and Hotel Modera respectively, while Chicago has a hidden experience called The Chicago Money Museum where patrons can learn more about how and where currency is made. The LondonHouse Chicago’s concierge Shannon Boland also loves recommending the Chicago Cultural Center as a chance to take in more about the city and see some incredible rotating art exhibits, but any large metropolitan area is bound to have a cultural center that also acts as a free sightseeing activity. If you are in D.C., Chris Adcock, the Clefs d’Or Concierge at The Jefferson, recommends you check out the free Smithsonian museums, in particular, the National Air and Space Museum and the National Portrait Gallery, as well as the Library of Congress.

Even if you are traveling abroad, be sure to ask about free museum days or deals in the surrounding area. Take the concierges at the Bank Hotel in Sweden for example, who recommend learning about Swedish architecture and design at the Architecture and Design Center or even going underground to see the amazing subway art. The point is, you never know what you can find in a new city. These concierges recommend trying to learn about your surroundings through free museums and cultural experiences you won’t soon forget.

Meanwhile, if a hike or bike ride seems too involved for vacation,  sometimes a walk will suffice as a simple and relaxing activity for the family. Eric Landt, General Manager at The Wauwinet in Nantucket loves pointing his guests to the ‘Sconset Bluff Walk (also known as the Cliff Walk)  which is the most scenic path in Nantucket or suggesting they opt for some free morning meditation on the beach.

Whether it’s in the valley, the mountains, or by the sea, these concierges say it can never hurt to get outside and take in your surroundings. As a visitor, you’ll be able to appreciate the landscape through walking trails, boardwalks, and open parks.

Explore the downtown

As we said, hotel concierges know their area, and they want to help you get to know it, too. Several hotels will offer free walking tours of the surrounding city, but concierges suggest you also wander on your own. If you’re a book lover, some of our concierge experts loved recommending small, niche mom-and-pop bookstores that were a part of the local fabric for a taste of where the locals go.

The concierges at the Bank Hotel in Sweden pointed out that in some big cities there are older, more historical sections, along with the newer, built-up ones. They love suggesting guests that walk through Stockholm’s old town along the narrow streets, as well as the newer, more modern heart of Stockholm’s downtown, but you should take this into account and use the concierge to scout out all the lesser-known spots, no matter what city you’re in.

Try Local Cuisine

Concierges can recommend the best restaurant for you based on budget, but if you’re looking to cut costs on eating out or sampling some of the local fare, many of our experts suggested that markets are the best place to go. Concierge, Patrick Trevor, from Mr. C Seaport loves sending his guests to the local farmers market.

“My favorite free recommendation is to take a trip to Union Square Farmers Market for a free sample extravaganza,” he says. “All of the farmers are very excited to share their products and ask them for a free sample!” The Grove in Beverly Hills is also famous for this, as is Smorgasburg in NY and LA. The concierges at The Nines in Portland, Oregon recommend the Portland’s famous Saturday Market. And if you’re traveling abroad, finding a local open-air market may be easier with cities like Paris and Barcelona boasting expansive spaces for taking in both the culture and the cuisine. Either way, these spaces are often the best places to mingle with locals. You might even want to ask vendors for their favorite local restaurant recommendations—locals know best!

Listen to some local live music

This one might not be thing first thing that comes to mind when you’re thinking of how to occupy yourself during a trip, but you’d be surprised at how many cities have live music events throughout the week. After a day of exploring, relax with some music. Take advantage of the talent around you and sample the sounds of the city by asking your concierge where the free concerts are throughout the week. From live rock to jazz and instrumental, there’s bound to be something for everyone’s musical ear.  The concierge at The Ritz-Carlton in  Los Angelesrecommends those visiting check out the numerous free concerts, festivals, and more at the historic Farmer’s Market at The Grove or Grand Central Market, while Zachary Serrano, the Clefs d’Or certified Concierge at the SLS Hotel in Beverly Hillssuggests concerts at Amoeba, where your favorite bands will play in between major festivals like Coachella. One lounge near this Michigan hotel hosts top local jazz musicians on Sunday nights with no cover charge. 

Take a day trip

While it’s always fun to explore the area around your hotel accommodations, concierges also like to recommend taking a day trip if you have the time. Ask them if there are any places nearby that you should definitely check out. For example, the concierge at  King Charles Inn in Charleston’s Historic District loves to have his guests tour the city, but also recommends they take a fun day trip to nearby John’s Island. Concierges are also able to help you arrange transportation for your day trip excursion: whether that means taking a scenic train or boat ride, or getting a car service to take you where you need to go. If you plan your trip out right, sometimes you can fit multiple exciting day excursions to nearby cities, towns, or islands.

Oil Soars to Four-Year High

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  • Oil prices rose to a four-year high following OPEC’s meeting this weekend, according to the Wall Street Journal.

  • Transportation costs are rising too – in all modes of transportation – by sea, land, and air.

  • Over past 12 months, WTI crude oil prices rose 37%, from $47 to $65/bbl.

  • This caused diesel fuel prices to rise 29% (from $2.50/gal to $3.22/gal).

  • Thus, overall trucking costs rose by 23% - about 2% every month.

  •  Container shipping costs are being driven up as well, as prices for bunker fuel have surged 270% since 2016.

  • Outlook for 2020 (when IMO pollution standards kick in): EVEN HIGHER!

How will this impact FF&E supply chains?

What can purchasing companies do to mitigate these rising costs?

Download OPEC’s World Oil Outlook 2018: https://woo.opec.org/, or contact Kevin Williams at KevinW@jmcgl.com, or your JMC sales representative to discuss alternatives  

Urgent FAQs on the New China Tariffs

Q1: What’s new? Starting Monday 9/24, US Customs will collect an additional 10% tariff on $200 billion worth of Chinese-origin imports.

Q2: Just 10%? Is that it? Nope. Starting 1/1/19, this additional tariff will rise another 15%, up to 25% additional tariff (unless negotiations are successful).

Q3: How can we avoid paying this 25%? JMC is working with many of our clients to accelerate their shipment, to arrive before 1/1/19. This can save them the difference (25%-10% = 15% possible savings)

Q4: How do we determine if OUR items are impacted? The list contains 5,745 full or partial tariff lines. Note that there are two parts the list: Part 1 products are fully covered (pages 1-18). Part 2 lists products that are classified in the 8‐digit subheadings of the Harmonized Tariff Schedule of the United States (HTS) that are partially covered by the action (pages 19-31).

Click here for the official list

Contract US truck rate growth to slow, but still climb, in 2019

by William B. Cassidy, Senior Editor, and Ari Ashe, Associate Editor, respectively, for JOC.com | Sep 18, 2018 10:31AM EDT

  US carriers are ordering trucks at record high numbers, but those trucks won’t be built, let alone hit the road, until next year. Drivers will still be hard to hire.

US carriers are ordering trucks at record high numbers, but those trucks won’t be built, let alone hit the road, until next year. Drivers will still be hard to hire.

After rising by double digits in 2018, US contract truckload rates could rise a more modest 5 percent on average in 2019, and swing even farther towards shippers afterward, if the hot US economy begins to cool.

Some industry analysts believe 2019 will be a transition year in which carriers still hold power over shippers, but the grip is loosening and could be lost completely, if economic growth stalls by 2020. Others understand conditions may change eventually, but say a repeat of the freight recession in 2016 is unlikely to happen unless the US economy slumps into recession.

Forecasters also warn shippers that they are merely making an educated guess, so a sound strategy would include paying close attention to spot markets in the next six months. Much depends on the strength of economy in 2019, and whether the balance between truck supply and freight demand swings closer to an equilibrium next year.

Shippers should not set hopes too high

Shippers looking for a return to balanced conditions shouldn’t set their hopes too high, based on currently available market data and projections of US economic growth. Some believe today’s bullish conditions — for truckers, that is — will last longer.

The US economy seems able to absorb capacity faster than trucking companies can add trucks and drivers. US real GDP expanded 4.2 percent in the second quarter and is growing at a 3.8 percent rate in the third quarter, according to the Federal Reserve Bank of Atlanta.

Carriers are ordering trucks at record high numbers, but those trucks won’t be built, let alone hit the road, until next year. Drivers will still be hard to hire.

For every pro-carrier market, however, there is a pro-shipper market — chief financial officers just have to be patient. Often spot rates are a leading indicator on contract pricing and history can teach us valuable lessons on the issue.

In 2014, spot market rates rose more than 25 percent on a year-over-year basis. Growth rates, however,

decelerated to 15 percent by the end of 2014, and into single digits by February 2015. Eventually year-over-year spot rates went negative in June 2015, according to DAT Solutions. In the 2015 third quarter, US real GDP expansion dropped to 1 percent, and to 0.4 percent in the fourth quarter, and remained between 1.5 and 2.3 percent until the 2017 second quarter.

In the contract market, motor carriers secured rate increases in 2014 and 2015, but shippers negotiated freezes and rate cuts in 2016 and early 2017.

The spot market began to recover in March 2017, eventually climbing more than 32 percent year over year this January. Contract rates quickly responded too, growing more than 10 percent earlier this year, and by 20 percent in August, versus a year ago.

Small victory for shippers: spot market rate growth decelerated since January

For shippers, the silver lining is that spot market rates have decelerated since January, ending August up 17 percent higher year over year. DAT predicts rates will grow in the teens through December, then further slow into single digits in 2019.

It will be increasingly hard, even with a healthy economy, to sustain year-over-year increases comparable to those seen in 2018. If history repeats itself, contract rates next year will look like 2015, then flip back towards shippers in 2020.

“There is enough pressure from the economy to continue to push rates higher but at a more moderate pace going forward,” said DAT industry analyst Mark Montague. “When you look at the structural drivers — energy, e-commerce, or general economy — everything says rates will still be higher next year, but there will be moderation in both the spot and contract markets.”

Matthew Harding, vice president of Chainalytics, explains that it’s very difficult to anticipate where the spot market will head because there are too many variables. Some of it is behavioral such as actions to counteract tariffs on Chinese-made goods. It can also be psychological, however, such as retailers panicking about empty shelves this holiday.

“What is most important to us is the differential between spot and contract rates. Coming out of August, our data show there was a 10 percent differential in rates. That 10 percent falls below the pressure that is necessary to continue sustainable growth in contractual pricing,” Harding said.

Based on a seasonally adjusted reading of Truckstop.com’s Market Demand Index, trucking economist Noel Perry thinks capacity has reached an apex, and spot rates will continue to fall, pulling down contract rates in 2019.

“Pricing and profits will stay strong in the contract segment through the end of the year, at least, and perhaps through the end of the 2019 first-half seasonal peak,” Perry said in an Aug. 3 column published on his Transport Navigator website. In early September, however, pricing relief still seems far off.

Broughton Capital economist Donald Broughton has a different view. Rather than being in the ninth year of a recovery, he believes the consumer market is still early in the recovery cycle, with the consumer-led portion of the recovery less than two years old.

“Although the comparisons are extremely difficult in the first couple months [of next year], overall freight shipments and freight expenditures will be higher in 2019 than 2018,” said Broughton, author of the Cass Freight Index and chief market strategist for Freightwaves.

In August, the Cass Freight Index was up 6 percent on shipments, 17 percent on shipper expenditures, and 10 percent on truckload linehaul rates, not showing any inflection point.

Shippers should remember the lessons learned from this year as they negotiate rates in as 2019. Next year won’t be as nasty as 2018, according to Andrew Lynch, president of Zipline Logistics, a Columbus, Ohio-based third-party logistics provider, but he also doesn’t “see freight markets plummeting back to where they were in 2016 for a very long time.”

Chinese-Made Air Conditioners, Food, Furniture, and Toys Part of Trump's $200 Billion Tariff List

By GLENN FLEISHMAN for Fortune.com on September 17, 2018

Boats, TV sets, and cooper are among the list of imports covered by $200 billion in new tariffs against China that the Trump administration announced Monday. The list is a lengthy grab bag of several hundred items, including large categories of consumer and bulk food, raw chemicals, and metals used in industry, personal-care items like perfumes, mattresses, toys, and much more.

This addition brings tariffs to about half of all goods imported from China to the U.S. Tariffs increase the cost of goods to U.S. buyers, and lead to higher prices for the same items from domestic producers and imports from countries that have avoided tariffs.

The surcharge starts at 10% later in September, and jumps to 25% by the end of 2018.

An anticipated and preliminary list of possible products appeared in July. The final list released today removed 300 items that include smartwatches, bike helmets, children’s playpens, some chemicals, and health and safety devices.

President Donald Trump said he imposed the tariffs to pressure China on business tactics that he said unfairly disadvantage American businesses. At the White House on Monday, he said the U.S. trade gap with China—the net between imported and exported goods between the two countries—was too large, and “We can’t do that anymore.”

A previous $50 billion round of tariffs imposed on Chinese imports largely affected products used by American manufacturers in producing goods. China imposed about $34 billion in retaliatory import charges.

The new $200 billion round directly imposes a surcharge on consumer electronics, kitchenwares, tools, and food. China has previously stated if America imposed this new larger set of taxes, China would place tariffs on American imports that total $60 billion.

So far, economists have found no broad negative or positive effect from earlier tariffs imposed on China, and on aluminum and steel imports from several countries. The effects are noticeable in particular categories, however. The price of washing machines in the U.S. increased 20 percent following tariffs on metal imports, and all appliances on average jumped 7%, for example.

The U.S. Treasury had invited Chinese officials, including President Xi Jinping’s top economic adviser, to attend talks in Washington this week. But a deputy to that adviser said at a meeting on Sunday that China would not negotiate with the U.S. under pressure. No talks are currently scheduled.

A government collects tariffs as a form of import tax. Tariffs can be effective in narrow cases to offset government subsidies that create cheap exports to the U.S. and others to boost economic growth, a practice sometimes called “dumping,” or to protect endangered domestic industries that have national or cultural importance. Canada, for instance, imposes high tariffs on some imported dairy products as part of price supports for its farmers. But tariffs are also used as a trade weapon, in which a country heavy on imports, like the U.S., attempts to use the surcharge to force policy changes that diplomacy has failed to reach.

The World Trade Organization, to which both the U.S. and China are parties, has a complaints process that can allow the imposition of tariffs if the party claiming unfair trade proves its point, and the offending nation doesn’t change its policies. The Trump administration has bypassed the WTO on its tariffs, however.

The vast majority of economists say that tariffs increase the cost of goods to companies and consumers without a meaningful improvement for domestic industries that benefit from reduced competition, because the higher prices subsequently charged reduce demand.

The United States is now the largest global crude oil producer

Principal contributors: Candace Dunn, Tim Hess on SEPTEMBER 12, 2018, for the U.S. Energy Information Administration

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The United States likely surpassed Russia and Saudi Arabia to become the world’s largest crude oil producer earlier this year, based on preliminary estimates in EIA’s Short-Term Energy Outlook (STEO). In February, U.S. crude oil production exceeded that of Saudi Arabia for the first time in more than two decades. In June and August, the United States surpassed Russia in crude oil production for the first time since February 1999. 

Although EIA does not publish crude oil production forecasts for Russia and Saudi Arabia in STEO, EIA expects that U.S. crude oil production will continue to exceed Russian and Saudi Arabian crude oil production for the remaining months of 2018 and through 2019. 

U.S. crude oil production, particularly from light sweet crude oil grades, has rapidly increased since 2011. Much of the recent growth has occurred in areas such as the Permian region in western Texas and eastern New Mexico, the Federal Offshore Gulf of Mexico, and the Bakken region in North Dakota and Montana. 

The oil price decline in mid-2014 resulted in U.S. producers reducing their costs and temporarily scaling back crude oil production. However, after crude oil prices increased in early 2016, investment and production began increasing later that year. By comparison, Russia and Saudi Arabia have maintained relatively steady crude oil production growth in recent years. 

Saudi Arabia's crude oil and other liquids production data are EIA internal estimates. Russian data mainly come from the Russian Ministry of Oil, which publishes crude oil and condensate numbers. Other sources used to inform these estimates include data from major producing companies, international organizations (such as the International Energy Agency), and industry publications, among others.

Legacy Classic shifts sourcing to Vietnam

by Thomas Russell for Furniture Today. Published on September 14, 2018

HIGH POINT — Case goods resource Legacy Classic Furniture is adjusting its China-based sourcing model due to the threat of tariffs as high as 25% on furniture shipped from China.

The company recently revealed it has lined up new sourcing partners in Vietnam to produce its bedroom, dining and occasional collections as well as standalone bedroom and dining sets and bedrooms in its LC Kids line.

Earlier this summer when tariffs were first announced on mostly component types of product vs. finished goods like furniture, the company initially planned to introduce four bedrooms from Vietnam in the fall.

However, when it became apparent that furniture was in the crosshairs of an estimated $200 billion in additional proposed tariffs ranging from 10% to 25%, the company decided to shift all its sourcing for both Legacy Classic and LC Kids. Legacy is moving all new and inline product to the Vietnam factories, with production expected to begin in December.

For years, the company’s line was produced in China at Lacquer Craft Manufacturing Co.’s Shanghai-area factory. Lacquer Craft is the manufacturing arm of Legacy Classic owner Samson Holding, which also owns Universal Furniture and Craftmaster.

Legacy Classic President Don Essenberg said the company will source from four or five plants in Vietnam, which he declined to identify at this time. As part of the transition, he noted that the company will use the same finishing suppliers — AkzoNobel and Sherwin-Williams — it has used previously.

“I am confident that as far as our customers and consumers are concerned, this transition will be seamless,” he said, adding that the product will be built to the same specs, designs and finishes. “The product strategy doesn’t change; the only thing that changes is the source country.”

While Vietnam has lower labor costs than China, the impact on finished goods won’t be known right away. Legacy’s line currently falls within middle price points, with beds retailing around $599 to $699.

“We really have to get into the factories to see how things work,” Essenberg said, adding that the product will be phased into the factories production schedules. “Our goal is to start production this year.”