Many of our suppliers are feeling the strain on stock levels as a result of the long-term effects of Covid-19 on business and rising importation costs for a variety of materials. In the coming months, you may notice a rise in pricing and decreased product availability across the industry, and with that in mind, we wanted to give you some potential reasons why.
Prices rising
Supply shortages are caused by a number of factors. Although the construction industry has not seen more work/projects being started in comparison to previous years, the lockdown has resulted in a sharp increase in projects starting all at once, which has resulted in an increase in demand for already scarce resources.
There are also specific product issues, such as a warmer winter in Scandinavia affecting lumber output and cold winter in Texas affecting chemical, plastic, and polymer manufacturing.
According to Noble Francis, the Construction Products Association's economics director, shipping costs have also risen significantly, specifically the prices of containers for materials and products shipped in from abroad. A 40ft container from Asia to Northern Europe, for example, has risen from $1,500 (£1,061) in summer 2020 to more than $8,300 (£5,873) by May 2021, and these prices are expected to rise further over the next five years.
Order lead times are lengthening and prices are rising as global demand grows and the UK imports many of its basic ingredients and materials. According to the Office for National Statistics, material prices will rise by 7-8% this year, with some materials, such as lumber, expected to more than double.
Demand
Many businesses saw an increase in demand for DIY supplies during the lockdown, but with the vast majority of manufacturers remaining closed and reducing production, the supply of products was depleted.
Product demand increased as restrictions were lifted and many businesses and tradespeople returned to work. However, because manufacturers were still unable to operate at full capacity, product inventory was already depleted, and raw material demand was skyrocketing. As a result, many businesses ordered fewer raw materials and, as a result, produced fewer products.
Many businesses are experiencing supply issues unprecedented in their history, owing to a lack of resources in the first place, delays in getting supplies through ports due to a shortage of shipping containers, and rising commodity costs due to increased demand for items.
Brexit
Steel is in short supply as global demand outstrips supply. Many steel producers have stopped accepting orders, fearing that panic buying will lead to dangerously low supply levels; however, global demand is expected to remain strong for the next six to nine months.
60% of raw materials come from Europe and 90% of timber comes from Europe too.
With Brexit also causing more paperwork to be completed at the port and increased costs from importing the products it’s increased prices a number of times already this year. So you might be able to import the raw materials from within Europe but at what cost to the manufacture.
Conclusion
With 100,000 people still on furlough, 5% of skilled workers being asked to isolate due to covid, and many people leaving the UK after Brexit, as well as a large number of skilled workers retiring over the last year and not enough people completing apprenticeships to supply the demand for skilled workers, we are also facing a struggle, even though we are now re-entering the workforce.
It truly is a perfect storm of problems with one after the other happening over the last year.
We will continue to work tirelessly with ladder manufacturers to get the best price and supply for you, our customers, and we appreciate your continued support and business.
As a business, we supply a wide range of access equipment from a range of suppliers to keep stock supply high. We will always strive to offer the best products at reasonable prices. All our products are certified to the relevant safety standards and you will never find “cheap” substandard products on our website.
If you have any further questions about this topic, please feel free to contact us on 01204 590 232 or email our team at customerserice@ladderstore.com.