Pricing volatility and transportation bottlenecks have plagued the construction industry since Covid’s massive 2020 disruption. With a host of obstacles still to overcome and a renewed commitment to supply chain stability throughout the industry, growing numbers of builders are turning to 3PL providers to stay on track and under budget.
Why Construction Costs Are on the Rise
Construction costs increased 14.1% in 2022 en route to the steepest prices the industry’s seen in 50 years – here’s why:
- Labor costs and availability – The primary driver of rising costs. Workers are requiring higher wages to keep up with a higher cost of living, and an aging workforce is creating a shortage of skilled workers.
- Rising material costs – Prices for materials like exterior paint grew as much as 50%. Gypsum products have been in such high demand, experts predict the price to continue rising for years to come. Other material prices are being driven up by tariffs, and some (like lumber) are rising due to shortages created by natural disasters.
- Global and economic unrest – The Covid pandemic, war in Ukraine and record-breaking levels of inflation are just a few of the many unexpected events scrambling supply chains both domestically and internationally.
- Increased fuel costs – The price of diesel fuel also reached record highs, resulting in higher transportation and operation costs.
- High interest rates – Acquiring financing for construction projects is more difficult when interest rates are high.
- Litigation and legal issues – Many cost-cutting measures utilized at the height of the pandemic are coming back to haunt businesses and contractors, as problems with reliability and breaches of contracts tie up company time and funds in court proceedings.
- Supply chain disruptions – Though improving each day, the global supply chain is far from stable. Many companies have resorted to stockpiling items in warehouses to ensure they have the materials needed to complete projects on time.
Why Construction Partners Are Turning to 3PLs
With so many factors contributing to rising costs, construction partners are looking for creative solutions to the daily onslaught of project setbacks and shortages. That’s where a good 3PL partner comes in. Experts at developing creative solutions on the fly, partnering with a 3PL strengthens the construction supply chain in a number of ways. A logistics team’s entire focus is moving items from A to B as quickly as possible, and to invest in contacts, resources and technology that allow for fast adaptation when unexpected challenges arise.
How First Call Serves Construction Partners
Supply chain disruptions can feel like a nightmare to businesses without assets to overcome logistical obstacles – for First Call, those obstacles are just another day at the office. Letting our experts handle construction material storage and transport mitigates risk, helps contractors meet deadlines and keeps costs to a minimum. First Call also keeps construction partners current on any state regulations regarding heavy equipment transportation to ensure our carriers are compliant and our loads secure in transit. With our latest expansion to Irving, TX, our team is more equipped than ever to take on shipping and warehousing needs from builders looking to save on overhead. As supply chains continue to fluctuate, we anticipate using our network of in-house assets and connections to aid a growing number of construction projects in the coming year.