Supply Chain and the Construction Industry

It’s no secret that the pandemic disrupted the global supply chain. Everything from cars to computers to food has been subject to the deviation from routine. Now, builders, developers, manufacturers, architects, and contractors are juggling with delays, lack of product availability, and fluctuating prices, usually going up, all affecting the bottom line.

What’s Causing Supply Chain Disruptions and How Long Will They Last?

The root cause of the supply chain disruption is the pandemic, but regional and country-wide lockdowns are a thing of the past. So why is this disruption just now reaching its current levels? It’s not simply the shutdowns. It’s the ripple effects felt throughout each stage of creation, shipping, supplying, and delivery that are problematic.

Production Issues

Both within the US and throughout the world, shutdowns created an initial lapse in production. This was true even in industries that continued to operate somewhat normally. Once ‘normal’ production resumed, pandemic protocols and staffing issues have continued to thwart the construction supply industry.

Hiring, or re-hiring, of staff to pre-pandemic levels has been a challenge, let alone hiring a larger staff to meet increased production demands. This has led to a larger investment in labor. This can be seen in hiring costs, the wages paid, the way they are paid, and the number of employees receiving them. For most industries, especially those operating with thin margins, an increase in labor costs, even to meet increased demand, often accompanies a rise in prices.

Overseas Shipping Issues

Many materials are produced worldwide, especially in China, and shipped overseas. Due to a number of factors, labor costs, environmental regulations, products manufactured overseas are often more cost-effective. This holds true even when calculating the previous cost of overseas transport. But that whole equation has shifted. Shipping container costs from China to the east coast of the US have climbed more than 500% over the past year according to freight-tracking firm Freightos.

Not only are shipping costs rising, but containers are stuck aboard ships outside many ports worldwide. The twin ports of Los Angeles and Long Beach, like Shanghai, Vancouver, and Hong Kong, are experiencing long delays in unloading. And it’s not a recent development, it’s been going on for over a year. This not only causes delays, but it also increases costs, making those imports look less and less like a cost-effective option.

Ordering and Supplier Issues

Suppliers have not been stagnant throughout this process. They have expanded their repertoire of production companies, often seeking local or American-made products to supplement the now pricier ones coming in from overseas. But, as previously noted, local producers cannot begin to keep up with the widescale shift. Incoming requests far exceed even expanded abilities for many producers.

Suppliers have also had to keep a closer eye on their own distribution. Robbing Peter to pay Paul is not often a good strategy for long-term beneficial business relationships. Many suppliers are putting caps on the quantity of products available to customers, allowing more customers to get a share of the pie, sometimes at higher prices.

Delivery Issues

Once the current backlogged ships are actually unloaded, whether that be with the help of the National Guard or not, distributing those goods is not a simple task. While the ports have extended the hours that trucks can load goods, some 24/7, it won’t do much without an increase in trucks and drivers. There’s no easy solution and a lot of waiting to be done.

How Long Will Supply Chain Disruptions Last?

Even with world governments and private companies alike working to ease the situation, there’s a good chance the supply chain will continue to struggle for the foreseeable future. According to the Associated General Contractors, these pricing increases and supply chain disruptions have already slowed progress on a variety of construction projects. Anirban Basu, an economist from the Associated Builders and Contractors, sees the latest construction job numbers, and knows what’s to blame. “The spread of the delta variant globally has increased supply chain issues. It means higher prices for inputs, it raises the cost of delivering construction services.”

What Can You Do?

Construction growth, while slowed by supply, is still experiencing exponential growth in the area. So how do you set your projects up to succeed despite these mounting difficulties? Be flexible, consider adapting, stretch, create good relationships with a variety of distributors, and re-evaluate suppliers.

They say necessity is the mother of invention, so think through every step of your process. How can it be streamlined? Can you embrace new technologies to increase efficiency? Can you seek out new adaptations to help your projects meet completion dates? Some companies are relying more on prefabrications. While others are using new materials, or old materials in new ways, all with a bit of creative thinking and the goal of delivering.

For projects being bid, build in additional lead time. Everyone is feeling the pressure of supply chain issues, but even so, no one wants to hear their project will take longer. Be realistic in delivery deadlines and build in time for materials delays and shortages.

Reimagine your supply chain, make friends with new distributors. While some relationships are not worth jeopardizing, in a time when everyone is scrambling to obtain the same parts, it pays to have multiple avenues to pursue.

Finally, partner with companies that have built resilience into their business models. Companies that do not rely on inefficient industrial supply chains, or a just-in-time methodology to decrease overhead are now highly sought after. Even if their prices were marginally higher in the past, they are well worth their value now.

At Able Scaffold, we like to be prepared. While we want to deliver supplies to your job site just before you need them, we pride ourselves in maintaining a well-stocked yard. Keeping supplies in stock means that, not only can we work miracles for rushed clients or emergency situations, we also don’t have to overly fear these disruptions. If you want to learn more about our scaffolds, post shores, or other construction and safety materials, contact us today!

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