By KERRY SMITH, EDITOR, ST. LOUIS CONSTRUCTION NEWS AND REVIEW MAGAZINE
Suppliers continue to vet contractors’ material orders and navigate insane freight cost escalations during the most challenging time many can recall in the construction industry.
According to a recent analysis by Construction Dive, building material prices have hit a 35-year high, with prices on roofing materials, bar joists and steel pipe increasing at least 50 percent just in the past 12 months.
Paired with the price spikes are ever-lengthening, unpredictable delivery dates. Commercial contractors continue facing material lead times of eight to 10 months for roofing, roofing materials and steel bar joists, and six to 10-month waits for precast concrete wall panels and structural steel.
What’s a supplier to do?
Negwer Materials VP of Marketing and Product Development Pete Wilhelms says frequent communication with longstanding, loyal contractor customers is essential. Negwer and other suppliers face the daunting task of vetting both the material orders and the requested delivery dates.
“It’s very similar to the toilet paper shortage of 2020,” he said. “Each contractor is advocating for itself and its client. That’s understandable. But it’s up to us to weigh which project-specific orders are legitimate, time-sensitive requests versus orders for a project that’s starting later. Getting the true dates on when that material is needed helps all of us.”
If a contractor specifies that bar joists are needed at the project site by May 1, for example, and later moves that date to June 1, Wilhelms says there’s a ripple effect throughout the channel. “When surprises come about or embellishments of when they actually need the material occur, it definitely creates issues in the overall supply channel,” he said, “especially on the delivery end because trucking is running at an extremely tight capacity.”
Across the country, contractors are building and leasing warehouses to hold material that isn’t yet ready to be used at the jobsite.
Rob Webb, president and CEO of Tampa-based Southwestern Suppliers Inc., says cash is king, credit is rare and price quotes expire in as little as five days.
“It’s more insane than I’ve seen it in the more than 30 years I’ve been in the industry,” Webb said. “As a wholesale distributor of rebar and concrete-related products, we’ve stayed on top of material costs by having a tremendous amount of inventory which gives us some latitude to distribute costs over these commodities. But right now, we don’t have the material or bandwidth to take on many new clients.”
A year ago, Southwestern Suppliers decided to challenge soaring material prices. The wholesaler said no to $20,000 worth of material with a $5,000 freight cost that morphed into $15,000 when it came time for the manufacturer to ship. “We found ourselves getting to the back of the line, paying an even higher price for the material and the freight,” said Webb. “Ocean freight has gotten even worse. The dependability of arrivals is out the window.”