As soaring ocean freight rates put pressure on exporters, Thai wooden furniture manufacturer Deesawat is urging exporters to explore closer markets amid geopolitical tensions in the Middle East.
Jirachai Tangkijngamwong, director of Deesawat Industries Co, said both sentiment and rising costs caused by the war are hurting Thai furniture exporters.
Before the war, exporters’ main concerns centred on US tariffs, which he described as “unfavourable but manageable”.
The war is now driving up logistics and material costs, making it harder for businesses to plan and commit to long-term contracts, said Mr Jirachai.
The company exports around 80% of its products to destinations such as the US, France, Italy and Japan, while Middle Eastern countries account for a small share.
He said the war has caused price volatility, particularly in logistics. Insurance and sea freight rates have increased significantly, with shipping costs rising by 50-80%.
Mr Jirachai urged producers and exporters to maintain their existing markets while exploring new ones.
Markets in Southeast Asia could be a promising option during this period, as their proximity helps keep logistics costs relatively low.
BARRIERS AND OPPORTUNITIES
Wood stain prices are expected to rise, while travel expenses for attending international trade shows have surged, he said.
The war has created negative economic sentiment, which is also affecting consumer behaviour. Many people are postponing furniture purchases, a trend that could occur globally, said Mr Jirachai.
Manufacturers focused on mass-produced, low-margin goods will be hit hard by volatile costs, while those offering customised products may have more room to absorb price increases, he said.
Companies may need to accept slimmer margins to maintain cash flow, said Mr Jirachai.
He described the industry as being in limbo, uncertain about whether to raise prices.
It is difficult to predict how much costs will rise in the future, especially as the products require long-term orders, Mr Jirachai said.
Moreover, the Thai furniture export industry is shifting away from mass-market products towards more craft-oriented and project-based work.
Other Asian competitors, such as China and Vietnam, have stepped up mass production, benefiting from greater economies of scale.
In addition, he observed that the Thai furniture industry is becoming more focused on the domestic market. As many boutique hotels and restaurants expand, demand for crafted furniture remains strong, he said.
Authorities and business operators should work together to identify and promote the unique qualities of Thai-made furniture, compared with competitors, said Mr Jirachai.
Even though some of Thailand’s competitors are well known for mass-produced products, there are still market opportunities for Thailand, he said.
