Significant year-over-year increases in shipping costs create greater urgency to plan and procure for projects earlier, according to DPR Construction
REDWOOD CITY, Calif., Feb. 14, 2024 /PRNewswire/ — Just as commodity prices stabilized, drought and conflict affecting global overseas shipping routes have driven up costs of global ocean freight, creating more urgency for capital project planners to partner with supply chain experts to get the best value and keep projects on schedule. Analyst reports show the price to ship from Asia to the US West Coast is up 94 percent compared to a year ago, while runs to the US East Coast are nearly 40 percent higher. This and other insights headline the Q1 Market Conditions Report from DPR Construction, one of the nation’s top technical builders.
“Drought affecting the Panama Canal and conflict around the Red Sea and Suez Canal have more shipping companies taking longer routes or putting their freight on rails upon arrival at nearer ports,” said Tim Jed, DPR’s supply chain leader. “This can add weeks to material delivery schedules. Given that our industry favors just-in-time delivery, customers should head off these challenges early in their planning.”
DPR recommends several mitigation strategies, including:
- Warehousing and storage solutions – With the right on- or off-site solution, project owners have the flexibility to take advantage of best pricing and head off concerns about timely delivery.
- Leveraging contractor sourcing data – Procurement is a constant process for most large contractors, so they have extensive knowledge to help pick the right times to buy.
- Advantageously using supplier relationships – Working with familiar suppliers can increase flexibility and create tailored solutions for individual projects.
“If you want to be opportunistic and get the best pricing, you need to understand market dynamics,” Jed said. “Working together with experts will not only deliver value, but will also create more predictable project schedules and cost certainties.”
DPR issues market conditions reports quarterly. In its Q4 edition, DPR examined key market sector trends heading into 2024. Other key takeaways from the report include:
- Artificial intelligence tools are showing promise, but they are still not reliable sources for market forecasting. Human consultation is irreplaceable.
- Construction confidence remains high despite previous years’ economic forecasts, especially in the advanced technology, manufacturing and life sciences sectors.
- Prices for gypsum and steel have shown double-digit price increases while certain electrical equipment continues to have lengthy lead times in excess of 50-60 weeks.
Explore DPR’s interactive market conditions dashboard and previous reports here.
About DPR Construction
DPR Construction is a forward-thinking, self-performing general contractor and construction manager specializing in technically complex and sustainable projects for the advanced technology, life sciences, healthcare, higher education and commercial markets. DPR’s portfolio of work ranges from large-scale new construction to small tenant improvements and special projects. Founded in 1990, DPR is a great story of entrepreneurial success as a private, employee-owned company that has grown to a multi-billion-dollar organization with offices around the world. The company is strategically focused on delivering more predictable outcomes through applications of virtual design & construction, prefabrication, its team of self-perform craft, and leveraging data to learn and improve from. DPR consistently ranks among the top building contractors and employs approximately 11,000 professionals across its family of companies. For more information, visit http://www.dpr.com.
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