What’s Ahead for Construction Shipping Partners in 2023

“Disruption” hardly begins to encapsulate the state of the global supply chain in recent years. From post-pandemic struggles to international conflicts and extreme weather events, the challenges facing virtually every industry’s logistical processes are vast in scope.

Those working in construction have walked a particularly treacherous road as of late, as shipping delays, material costs and the call for fully sustainable practices place increased demand on this crucial vertical. Let’s take a closer look at some of these trends expected to impact construction supply chains in the year ahead.

What’s Affecting Supply Chains?

One of the most difficult components of supply chain management is attempting to anticipate disruptive forces. Here are a few of the major factors already affecting construction supply chains in 2023:

Transportation costs. While fuel prices have mostly stabilized since summer ‘22 and are expected to remain stable through 2023, the variable cost of fuel is a constant threat to efficient transportation.

Environmental factors. Every experienced logistician is aware of mother nature’s ability to disrupt transportation plans across the board. Seasonal difficulties like ongoing drought conditions can lead to costly shipping delays, while more extreme events (like Hurricane Ian in 2022) can spike the price of certain materials such as drywall, timber, and roofing insulation virtually overnight. Weather conditions can also quickly become too severe to navigate safely, resulting in road blocks and closures.

Labor shortages. In addition to a nationwide truck driver shortage that has persisted over the past few years, labor shortages in other areas have significant effects on the construction industry’s ability to source affordable materials. Suppliers with access to the materials you need may not have enough manpower to process, package and ship those materials to buyers. With more demand than they can keep up with, suppliers often have to become more selective about which projects to work on.

World events. When considering potential supply chain disruptions, global conflicts can have real effects from thousands of miles away. Russia’s invasion of Ukraine has caused new barriers and higher prices for materials like copper and aluminum due to sanctions placed on Russian exports.

Alternative material use. Shortages always drive suppliers to seek alternative materials, which can cause new challenges and weaknesses in a supply chain. Rising popularity of alternative materials can also affect the price of the original product.

Demand for digitalization. Customers are coming to expect full visibility at every stage of the supply chain. They want to know where a product is, how long it’s been there, and when it moves onto the next stage of shipping. This requires adoption of digital tools to enhance transparency with customers. Adopting new processes and technology industry-wide requires time, effort and expertise to implement and effectively maintain.

How Are Building Supply Costs Changing?

While the markets for some materials are starting to stabilize, other markets are expected to require a longer recovery time. Here’s our look at the forecasted trends for a few key building materials:

Cement and concrete. Production costs for cement and concrete were up 14% in the third quarter of 2022 and unlikely to ease in 2023. A host of supply chain disruptions continue to crop up — notably the low water levels on the Mississippi River and halted production due to weather events like winter storm Uri — resulting in diminished supply.

Steel. Prices for steel are trending down, likely due to increased investment in alternative materials. The present cost of steel (which is still higher than pre-covid levels) could potentially result in renewed interest in it as a building material.

Lumber. Following elevated costs throughout most of 2021 and 2022, lumber prices are finally returning to pre-covid levels. This is due in part to oversupply from mills and a decrease in housing development construction. Lumber prices are not anticipated to spike again in the near future.

Drywall. Drywall prices steadily increased over the course of 2022, resulting in national averages reaching their highest point since peaking in the third quarter of 2020. However, drywall supply is trending toward equilibrium, which means prices should level off without any dramatic increases in the coming year.

What to Expect in 2023

Despite the challenges listed above, the outlook isn’t entirely dour. Demand for commercial construction is trending upward, though there is a great deal of variation between and within markets. There’s likely never been a more critical time to evaluate supply chains for potential weak points than in today’s volatile environment.

That’s where a third-party logistics (3PL) company like First Call can help. With top-of-the-line software solutions, a nationwide network of trusted shippers and carriers and two decades of supply chain management experience, First Call can safeguard your business against potential delays and disruptions ahead while providing cost-effective storage and shipping solutions.