With today’s globally interconnected supply chain for hotel FF&E, if your products are coming from overseas, you can expect to see an impact when challenges arise in other parts of the world that affect major shipping lanes. Such is the case concerning the current Red Sea crisis and the Panama Canal drought.

In this post, you will learn what’s going on, how these events affect the hotel FF&E supply chain, and steps you can take to minimize the impacts to your hotel project.

The Red Sea Crisis & Panama Canal Drought

The unrest within the Middle East has created the opportunity for increased piracy within the Red Sea. Attacks to ships are making passage through the Suez Canal dangerous, so shipping companies are diverting vessels around Africa instead. This adds time and cost to shipments.

To make matters worse, in addition to Suez Canal issues, containers coming from the Far East are finding it difficult to cut through the Panama Canal, one of the world’s busiest waterways. Daily vessel transit restrictions due to severe drought conditions are allowing fewer ships to pass through the canal. A growing backlog is forcing ships to wait days or even weeks to get through, or else re-route south to go around South America. Either way, transit time and cost are higher.

How the Crisis and Drought Affect the Hotel FF&E Supply Chain

Hoteliers must plan for these new disruptions to the supply chain in their schedules and budgets. The Suez Canal and Panama Canal issues have caused the lead times of affected products to increase by an average of two weeks. Furthermore, current container costs have doubled in price. Thankfully, we have yet to see pandemic-level surges of $10,000 to $25,000 per container, but we are seeing container pricing from $3,000 to $6,000 – and rising. If Panama’s rainfall this year turns out lower than expected, the situation at the canal will get worse.

How to Minimize Their Impact on Your Projects

Due to the greater risk for delivery time and freight pricing increases, Innvision encourages you to check in with your FF&E provider on this topic. You’ll want to ensure they are staying on top of the current issues and sourcing products with minimal service impact whenever possible.

Domestic producers continue to be more reliable with their timelines. For any overseas products you’ll be purchasing, we recommend using manufacturers who take more aggressive inventory stocking positions to help offset some of these global issues.