Estimated reading time: 7 minutes, 45 seconds.
If you could sum up the construction supply chain in one word, it would be “unpredictable.” Commercial construction companies and their customers have dealt with ongoing challenges since 2020, leaving everyone wondering if they will ever see a light at the end of the tunnel. Though the supply chain remains volatile, 2022 brought some changes that indicate we’re heading in the right direction, albeit slowly.
Experts from Mortenson’s estimating and construction management teams provided insight on U.S. trends they’re observing in Q4 and what they anticipate happening in 2023.
Factors Affecting the Construction Materials Supply Chain and Prices
Numerous factors can cause construction material supply chain disruption. Here are some of the variables that influenced the supply chain in 2022 along with local and global supply chain predictions for the coming year.
Skyrocketing fuel costs affected transportation costs in the summer of 2022, but fuel prices have stabilized and are anticipated to remain stable or decrease in 2023. However, the logistics of transporting materials will likely remain a challenge due to driver shortages, especially for construction sites in more remote areas of the country.
Labor shortages had a significant effect on construction material cost and availability nationwide. For example, a supplier might have access to raw materials, but lack labor to process and transport them. These shortages, combined with an uptick in construction, have resulted in trade partners being more selective in which projects they choose to work on.
Going into next year, workforce shortages will continue to affect different levels of the supply chain, from collecting and processing raw materials, to production, manufacturing, and transportation.
Extreme Weather Events
Flooding and catastrophic weather events caused major supply chain disruptions in 2021 and 2022. With Hurricane Ian devastating areas of Florida in late September, we could see price increases and material shortages for timber, drywall, roofing insulation, and other materials utilized in both residential and commercial construction projects. It’s tough to anticipate when this will happen and to what extent the construction supply chain will be affected.
Russia is a heavy copper producer and Ukraine is a major exporter of metals and other raw materials. The war in Ukraine both created supply barriers and triggered an increase in the export prices of materials like copper and aluminum. As the war continues, we can expect continued shortages and price increases for these and possibly other commodities.
Alternative Material Use
Alternative material use ramped up when we experienced shortages of steel and other critical construction materials. Unfortunately, that caused additional supply chain issues. “Scarcity of one material requires you to seek alternatives. Then you’re placing stress in other spots and causing a ramp-up in demand there. If suppliers aren’t prepared for that increase in demand, then you start seeing shortages in certain alternative materials,” explains Josh Rudolph, a senior planning and scheduling manager.
The popularity of alternative materials has caused prices of products like steel to trend down in an effort to sell more product. And we’re likely to see that trend continue into 2023. Clark Taylor, VP of estimating explains that “commodities don’t want to price themselves out of the market—the availability of alternative materials in the marketplace is one pressure they often respond to.”
Mortenson is a Minneapolis construction company experienced in navigating supply chain issues to keep large-scale projects on schedule. Connect with one of our Minneapolis commercial construction experts to discuss your next project!