In early March, we posted an update about the supply chain for hospitality furnishings. A confluence of factors had combined to snarl shipping networks worldwide. Since then, Innvision has gained further insight from suppliers and transportation providers into the constraints they are facing. We’ll share what we’ve learned, when things might improve, and how hotel owners can minimize the negative impacts to their hotel projects.
FF&E Logistics: Overseas Suppliers
Foreign suppliers of raw materials or finished goods have been facing a shipping crisis in 2021 that COVID-19 has helped create and exacerbate. These manufacturers can’t get consistent and reliable information from their global logistics partners regarding their ability to ship product. US economic growth, aided by stimulus payments, is driving shipping demand for all products to elevated levels. As a result, freight forwarders are having trouble finding empty shipping containers, securing space on vessels, and providing accurate information about when product will ship.
Actual ship dates are extending up to three weeks beyond the original dates. Furthermore, once a ship does arrive at a US port, the vessel may have to sit with its containers on board for weeks before actually being able to unload. Multiple factors at ports such as Long Beach, California, are creating this congestion and the resulting delays. Unfortunately, suppliers see no end in sight, warning that this undesirable situation is unlikely to improve much until at least Q4 2021.
Manufacturers have seen significant increases in cargo costs. The price of a container has more than doubled from February 2021 to April 2021, and shippers warn that very soon these costs will be increasing another 25%. Some suppliers are passing along these hikes in the form of container surcharges on all orders. Unfortunately, these charges won’t go away until mitigating factors influence supply and/or demand.
FF&E Logistics – Domestic Suppliers
From a freight standpoint, most domestic FF&E producers are better off than their counterparts abroad since they are not at the mercy of limited container availability. Nevertheless, American manufacturers still face transportation issues. A truck driver shortage exists in the US and will likely worsen over the next two years. The problem: an increasing number of drivers are retiring, while fewer new drivers are coming into the industry. In addition, fuel pricing has been on the rise since even before the largest US pipeline experienced a recent Russian hacker ransomware attack.
US FF&E suppliers are making adjustments. Flooring vendors who were manufacturing luxury vinyl tile (LVT) abroad are moving production to Georgia. Lighting providers are building inventory in their US warehouses to offset increased lead times and costs. Other vendors experiencing labor shortages can’t hire enough workers to meet desired production levels.
US soft seating producers are resetting expectations due to hardships they are facing. Insufficient foam quantities are driving up the price of foam in sofas and lounge chairs. This foam shortage set in motion by February’s winter storms in Texas has not relented and could extend through the summer. To add fuel to the fire, too few truck drivers are driving too few tankers full of crude oil, one of polyurethane foam’s primary raw materials, to seating suppliers. This further constrains the supply of foam, and with poor visibility, soft seating manufacturers have had to lengthen product lead times.
Actions You Can Take
If you’re a hotel owner who will soon be renovating or building a new hotel, Innvision recommends a few steps to make things easier. Start by talking to your procurement firm very early in the process. With guidance from your FF&E provider, you can likely identify domestic sourcing options to avoid the container supply and cost issues altogether. Innvision has relationships with many high-quality American manufacturers.
You can align everyone on your project team so they know how important it is to place orders as early as possible. The sooner suppliers can order materials, the better. Avoid surprises by being aware that raw materials, labor, and other key input costs are rising and budget for some inflation from start to finish.
With all of the supply chain disruption happening today, the best step you can take is to hire the right FF&E provider. Innvision does the legwork for you to find suppliers and freight carriers who are in the best position to deliver product when you need it and within budget. Every day, Innvision searches for alternate vendors, manages the transportation of shipments, and smoothly guides clients through the hotel project process. Contact us today to learn how we can help you.