This year has been a year of adapting and changing like we haven’t seen in a long time. Any construction or renovation project relies on efficiency and a tight schedule. Currently, we are not seeing major bottlenecks with FF&E production itself, but rather with shipping and freight timelines. The supply is still outweighing the demand, so the issue isn’t with FF&E or OS&E supplies and manufacturing anymore, but with actually getting those materials to the hotel site. So what is happening in freight and logistics world right now? Well, let’s start by taking a brief look at how we got to this point from that point of view.
Freight Logistics and New Challenges
Beginning in January, the complexities of Chinese New Year are a yearly constant for freight and container logistics. This year, however, we were faced with a new addition of factories and mills not returning to their regular production schedules immediately due to COVID-19. By the time we reached early to mid-March, many production levels in factories overseas were close to operating back to normal, but businesses in North America started to modify their operations to help reduce the risk.
Once early April hit, the supply was there, with very little demand. Some factories are still being affected and are not operating at full capacity, and still have some trouble getting some products to the manufacturer. Container ships reduced their fleets to offset costs, and capacity lowered to match the demand. To help offset the loss of travelers, some commercial airlines began taking on more cargo flights adding to availability of airfreight, however that became a very expensive option.
How Freight Management is Meeting Changes
Starting in mid-June, the demand has risen to meet with the supply lines, but capacity on container ships hasn’t been able to match that rate. Along with businesses and construction resuming, the summer months are typically a busier and heavier time on freight. Typical produce and product shipments are added to the PPE equipment that is being shipped and prioritized, as well as the backlogged FF&E and hospitality products.
The second half of the year is also the heaviest typically for retail sales, so the production of those goods is also increasing. Overall, demand is extending past the capacity amount on ships, and it results in many shipments getting bumped past their scheduled time due to overbooked containers.
We talked to a few freight logistics professionals to get their take on what they’re seeing and got some great feedback and insights. Kelly Morgan with JMC Global shared that as of July 8, many carriers have reduced their ocean freight rates and the general rate increase (GRI) and peak season surcharge (PSS) that are usually in place this time of year have been postponed for the time being. They had raised those prices and implemented surcharges in June, but have temporarily reduced those rates.
What the Experts Have to Say
According to Casey Shaw with WorldWide Freight, they have seen airfreight pricing increases of up to 400% from certain locations due to the increased demand on PPE supplies in addition to other material goods. They do expect the prices to normalize, but that may still be weeks or months away. When it comes to domestic freight and truckloads, thankfully there hasn’t been a price increase thanks to low diesel prices, and they are currently able to keep up with demand. By utilizing less than load (LTL) freight, it could be a cost-effective way to meet demands and deliver expedited goods in smaller quantities.
Another possible increase in cost could come from overlength freight. “Nearly all carriers are adding fees to items that are over 8 feet long,” said Matt Sysco with EMCO Logistics. He also mentioned that carriers are becoming far more selective on what they pick up in the first place.
Navigating Through Logistical Hold Points
With so many unavoidable hold points, is it even possible to know and stay on schedule? Absolutely. The biggest way to ensure that your project stays on track is to get those item quantities and orders placed EARLY, so that there is extra time allotted for shipment. Because freight containers are often overbooked, it’s possible for your shipment to get bumped to the next date, which with fewer ships, they are traveling less frequently. Getting that item quantity confirmed early is a good way to approach these hold points, so even a shipment delay won’t affect your overall schedule. Container guarantees, ship guarantees, and transit guarantees have definitely become even more important than they already were, to be sure.
FF&E Purchasing Agents Guide to a Logistical Success
Working with Beyer Brown as your FF&E purchasing agent, we can stay on top of new hold points and work diligently to avoid. Our project managers are always in contact with carriers and working hard to ensure that your project will meet deadlines, even with new bottlenecks in place. Having a great working relationship with a variety of carriers and logistic management partners gives us a wellspring of information, insights, and reliability when it comes to navigating an ever-changing world.
Just another reason who you choose for FF&E procurement is incredibly important, and not all purchasing agents are equal. Choosing a team you trust and who prioritizes communication and clarity in each stage is crucial to the on-time success of a project. If you’re curious about our in-depth FF&E purchasing process, we outline it a bit more on our procurement process page.
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