2022 Logistics & Supply Chain Issues by the IOC Construction Company

Global supply chains are congested. Everyone is asking our team at the IOC Construction Company why material costs are rising due to shipping. We’re continuing to see supply chain issues into the year ahead. Demand for materials continues to remain high, as much is manufactured across the globe and has faced challenges since the spark of Covid-19.

What does this mean for our clients at Inside-Out? First, let’s discuss why there is a shipping crisis.

Congestion at the ports. In 2021, California reported there had been a record-breaking queue of container ships outside major ports. Companies that hire shipping lines to move their goods across the Pacific Ocean are waiting offshore until a spot opens up at the port to dock, move through Covid-19 protocols and unload materials. The volume of imports from Asia to the U.S. increased by 40% in 2021 compared to 2019.

Transit time has doubled due to pandemic workplace restrictions and not enough workers. Elizabeth explains “the time it takes for goods originating in China to reach their destinations through West Coast ports has more than doubled.  It currently costs $10,000 to $15,000 to ship each 40-foot container from China to the West Coast, more than five times the pre-pandemic rate.” Companies ordering materials are placing orders many months in advance, paying higher rates and ordering in large quantities to ensure enough inventory is on hand.

The entire process has slowed down – ships are waiting days or weeks to unload their cargo.
Ports handle over 17 million 20 ft containers each year. Currently, over 70 vessels are waiting in the ocean on average more than 18 days at sea to enter the port. Once the ship enters the port, each container is removed one-by-one from a crane. From here, each container is placed into a staging area and eventually picked up by trucks or loaded onto trains. And with a labor shortage, we’re seeing more delays in containers being picked up by trucks, which again slows down the process for containers to be moved off of the ships and across the country. There is nowhere for the containers to go. Once unloaded, the containers could sit at port for weeks as warehouses and container yards have no additional space to store the containers. Container shipping lines are working to resolve some of the bottleneck issues by expanding hours and creating a pickup incentive program at the Los Angeles and Long Beach ports. By 2023, the shipping industry will have more container vessels in their fleets. And, additional investments need to be made to infrastructure in the ports, roads and bridges to handle the volume.

Warehouses are at full capacity. Employers have faced more regulations since Covid-19. Due to the lack of vacancies in warehouses, it has stalled construction of new warehouses to be built. Think about the shipping delays we just explained and apply it to every piece of construction material – doors, windows, raw materials, etc.

The global supply chain issues might take some time to resolve. Consumer pricing on material is still expected to rise. All of these issues have complicated matters in the supply chain and have resulted in 1) delays in getting materials needed to complete your project and 2) increased pricing on materials. Elizabeth says “Consumers are now noticing the impact of the supply chain issues and how it is affecting them in their daily lives: low inventory, delayed shipments, higher prices. Shipping has definitely been affected by the pandemic and has made business unpredictable for everyone.”

You’ll want to lock in your rates on both supplies & labor ASAP for your upcoming project with The IOC Construction Company. Schedule your 2022 repairs and renovations now!