Like many other industries, the construction industry has been subject to pricing volatility and bottlenecks over the last few years and it is even more difficult than ever to stay on top of everything that is necessary for running a successful construction company. With another uncertain year ahead, an increasing amount of construction companies are partnering with 3PLs (third-party logistics providers) to help optimize their operations.
Rising Construction Costs
The construction industry is facing several challenges. Like many things, construction costs rose 14.1% in 2022. Rising material costs had something to do with the overall increase, as in many other industries. Prices for materials like exterior paint, lumber, and gypsum increased substantially. The cost for some materials is higher due to tariffs while others are due to supply chain shortages or natural disasters.
Other factors include:
– Labor Costs. Increasing costs for labor are affecting the construction industry. Workers are requiring higher wages to keep up with a higher cost of living. This is exacerbated by the truck driver shortage.
– Increased Fuel Prices. Diesel fuel reached record-high prices last year, which translated to higher transportation and operation costs.
– Supply Chain Disruptions. The global supply chain is still experiencing issues, although not as severe as a year ago. Many companies have increased their inventories to make sure they have enough raw materials on hand.
– Legal Issues. Some measures that businesses used during the pandemic are now causing issues for contractors who need to defend themselves in court for breach of contract or other issues.
Construction Companies Relying on 3PLs
Construction companies are looking for alternative ways to optimate their business, increase efficiencies and cut costs. Rising costs and delays can affect the bottom line. However, a reliable 3PL partner can help to strengthen the construction supply chain by moving items faster and having greater investment in a network, resources, and technology to deal with issues when they arise. There are several reasons that construction companies are looking to partner with 3PLs:
– The 3PL Network. 3PL partners have more buying power than a single company does. They are able to negotiate better prices by buying in bulk, which saves money. They can also buy from multiple suppliers to get the best price for each product. By utilizing their extensive network, 3PLs can reduce costs and ensure that items arrive when they should.
– 3PLs Use Data. 3PL partners have the ability to access information about the industry and its logistics network. They are able to use their data to optimize your logistics network. They can work with you to ensure your processes are streamlined and optimized. This in turn helps to meet deadlines, stay on budget, and make the most out of resources.
– 3PL’s Specialized Services. Specialized services are another way that a 3PL can be beneficial to a construction company. Specialized services like warehousing, inventory management, JIT delivery needs, packing and palletizing, and freight transportation can all be managed to keep construction projects moving.
– 3PL Partners Grow Your Business. A 3PL partner can help grow a business by providing a range of services. From warehousing to transportation of materials, a 3PL can make sure that your business stays on task while keeping costs in check. This is especially important for construction, where many tasks are reliant on others being finished first. Inventory and raw material management and transportation of them can be taken care of while you concentrate on building your business. This partnership is a great way to increase efficiency and improve the bottom line. A 3PL allows for your business to grow because all of the smaller details have been handled.
Your Trusted Partner
Supply chain disruptions will continue to occur within the construction industry. Outsourcing some of your logistics and transportation needs to a trusted 3PL can improve efficiency and your bottom line. At Red Arrow Logistics, we can help handle construction material storage, help contracts meet deadlines, and reduce costs. So, whether you are looking to save money or need help managing materials, we can help your company meet its goals in 2023.
Red Arrow offers the scale and scope of services including air, ocean, and ground transportation to meet the budget and schedule requirements of the largest and smallest companies alike. If we can be of assistance, please email us at [email protected] or give us a call at 425-747-7914.
