Is Today's Hotel FF&E Supply Chain Improving?
When the pandemic began, it disrupted worldwide hotel FF&E production and logistics networks in various unanticipated ways. Manufacturers of all types of products and freight providers transporting those goods around the world felt a crunch. These challenges persisted throughout 2021 and even got worse in early 2022 as new dynamics came into play. The question as we near the halfway point of this year: is the supply chain getting better?
At Innvision, we’re always up-to-date on the latest information regarding the FF&E supply chain. We know it impacts our customer’s new construction or renovation projects, so we keep track of shipments, lead times, and the supply chain to help our customers experience the fewest and most minor delays possible.
In this post, you’ll learn what has changed in the last 6-8 months regarding production, shipments, and lead times. In addition, we’ll update what manufacturers are doing to keep the supply chain in check, what we are expecting in the future, and what hoteliers can do to ensure their projects run as smoothly as they can.
Manufacturers that have the capability to produce in North America are increasing their capacity here. Others have tried to move production back to China, where production capacities are also improving. Nevertheless, more hoteliers are now refreshing their properties post-pandemic and need new FF&E, making it difficult for manufacturers to keep up. Scaling up capacity fast enough for a growing level of demand is and should continue to be a big challenge.
Over the past two years, freight moved more slowly thanks to US port congestion, lockdowns in China, and other factors. However, more recently, C.H. Robinson has reported less port congestion. But there is still a shortage of trucks and drivers within the U.S. once the cargo has cleared customs.
Container costs have been extraordinarily high. Hefty ocean surcharges have often made overseas shipping unattractive, including cases where the freight cost is more than the cargo itself. This means that while clients may save some money on certain internationally-sourced goods, paying exorbitant freight fees can negate overall savings. In comparison, domestic fuel prices continue to climb, which is not helping domestic freight pricing, but in many cases, it is still less expensive and delivery is much faster for FF&E sourced within North America.
We have seen significant improvements in lead times with manufacturers able to produce in North America. Lead times are improving for overseas shipments also, but China’s “zero tolerance” policy means sporadic rolling COVID lockdowns are hurting production levels and extending lead times there. For product sourced in Vietnam, lead times are shorter and transit times can be as little as 5-6 weeks, down significantly from 10-12 weeks during the thick of COVID.
The Supply Chain
Many manufacturers have improved their supply chains by finding better methods and transit routes and by getting creative in how they source necessary materials and components. But fuel, labor, and overall demand are still pressures weighing on the hotel FF&E supply chain. Production planning for many suppliers remains difficult. But with this in mind, at Innvision, we partner with suppliers who take proactive steps to manage their production, be reliable, and keep rising costs in check.
Like many industry experts, we see a pent-up demand that will be hard for all manufacturers to catch up with from a supply standpoint. We see shipping lead times improving, but product and freight pricing will likely remain high for the next 6-8 months.
Now more than ever, it is critical that hoteliers identify and work with FF&E providers and manufacturers who are looking out for them and practicing clear communication and effective production planning to make their hotel FF&E project a success.
Our primary focus at Innvision is to deliver a seamless and stress-free project to hoteliers, who already have enough on their plate with day-to-day operations and marketing of their properties. So, if you’re looking to begin your next hotel project, don’t wait for the supply chain issues to resolve themselves. Rather, work with a procurement partner who stays informed and can minimize the number of surprises. To learn more about how we can make your next project a success, reach out!