May 2022 Update, Part 1: Shipping Crisis & Supply Chain Impacts to Architecture & Construction Projects
This is a detailed feature on the current Supply Chain & Shipping situation for Architecture & Construction projects - how the crisis works, present conditions, delays you can expect, & what to do.
Hello everyone, it’s early May 2022. I have a detailed update focused on the Supply Chain and Shipping situation, and how these are impacting Architecture & Construction projects.
This is a two-part release - next week I have a Part 2 covering Inflation & Rising Prices, potential Real Estate Stagflation, plus Current & Future Impacts on the Architecture & Construction Industry.
For a quick background, read these two pieces from earlier this year:
We raised four areas where we see challenges this year:
Rising Inflation – We predicted rising inflation, resulting in increased costs for Construction, and shipping costs, plus additional costs for Supply Chain delays.
Supply Chain – we predicted the ultimate effect of the supply chain is two-fold – one is unreliability in shipping assessments, and two is longer construction costs.
Stagnating Real Estate and Property Prices – We discussed how a booming real estate market in late 2021 to early 2022, would conclude with stagnating real estate and property prices, as demand slows in 2022.
Rising Interest Rates – we hypothesized new construction may slow down as interest rates rise, and that we’re likely to see a slowdown in new projects in late 2022.
It’s been a few months, so let’s see how things are unfolding. I’m going to start with Supply Chain this time, since that topic is particularly interesting…
Supply Chain & Shipping Crisis
Complicated situations have evolved on all projects – often for multiple trades on your entire project – - due to supply chain delays and shortages.
These are affecting vendors at every stage in their process, from procurement of raw materials from suppliers, to delivery of finished product. The delays are unpredictable in advance - every manager should be prepared for unforeseen delays that could affect the entire completion schedule.
Case Study in New York
A large office floor expansion I started in June 2021, entered construction in September. Construction was to end late March 2022, but we were forced to delay the move-in to early-mid May. There were two concurrent issues, simultaneously, impacting us, starting in January 2022.
First, with carpets:
The carpet manufacturer (based in Pennsylvania) didn’t have raw materials for our carpet on time, a special silk fabric delayed from their own supplier who did not have it in stock, awaiting the next delivery (also disrupted).
We did get the carpet delivered delayed in late February, only to find out the glue was improperly applied - the entire order had to be remade. A new batch was delivered in mid-April, extremely late.
Next, the core furniture order:
The order was placed in September and due to ship from China in January, which was amid a new wave of lockdowns.
Our product was completed on time, but our product shipment was delayed two weeks due to a lack of available containers.
Once on the way – we learned the shipments were sent on two separate boats in February, and were due to arrive separately a week and a half apart.
The arrival dates were then delayed from late February to mid-late April, lacking docking berths at the port of New York City.
The first shipment was delivered on time;
The second shipment was still on water, awaiting berth space, on the planned site delivery date of April 19. We finally received it on April 27 – over two months delayed.
This shows the complexity of the supply chain. By the time these concurrent issues resolved, our move in delayed from mid-late March 2022, to mid May 2022. As I write this in May, our project is still under construction.