Manufacturers and construction businesses around the world have been grappling with pandemic-driven consequences for well over a year now. Unfortunately, these same lingering challenges are severely impacting the shipping freight markets to create a host of material cost increases that have put a big stress on the construction industry in general. Cement is no exception.
Some of these challenges include:
- Drastic Bunker Fuel Increases
- Surge in China’s cement imports
- Dry Bulk trade growth outpacing Fleet growth
- Port Labor Shortages
- Increases in Global Commodity flows
- Trade Wars moving cargo from freight logical to illogical origins
Months ago, the Associated General Contractors of America (AGC) posted a Construction Inflation Alert. This was meant to inform project owners, government officials, and the public about the extreme cost increases and supply-chain disruptions affecting construction. Since then, price increases have intensified and spread to additional materials, while lead times for both production and deliveries have lengthened.
From the Associated General Contractors of America:
Owners need to recognize that significant adjustments are probably appropriate regarding the price or delivery date of projects that were awarded or commenced early in the pandemic or before, when conditions at suppliers were far different. For new and planned projects, owners should expect quite different pricing and may want to consider building in more flexibility regarding design, timing, or cost-sharing.
Contractors need, more than ever, to closely monitor costs and delivery schedules for materials and to communicate information with owners, both before submitting bids and throughout the construction process. Materials prices do eventually reverse course. Owners and contractors alike will benefit when that happens. Until then, cooperation and communication can help reduce the damage.
How has this trickled down to us?
To date, the main impact has been on the cost of raw materials due to these impacted shipping costs. As of now, there have been minimal supply concerns for cement in our local market. However, fly ash supply continues to be limited, causing many logistical hurdles as we manage plant capacity, concrete mix requirements and the like. We are committed to working with our customers to ensure that their projects stay on time and on budget. Have additional questions or concerns? Folsom Ready Mix is here to help, please don’t hesitate to reach out to us!
Sacramento (916) 851-8300
Redding / Anderson (530) 365-0191