May 26, 2021 Global supply chain update
This is a global supply chain update for Vancouver and BC flooring buyers… this will be short and to the point… starting with this: it is a gong show!! Absolute craziness.
We are very happy to hear from Bonnie and the province wide update yesterday. That is very encouraging, and we are optimistic day to day life will trend back to normal. That said, the global supply chain is in a very difficult position.
Note: it is possible that everything written below can apply to all industries. If global shipping container delays impacts BC flooring, certainly it will impact all other imports as well. Read the below and when you see ‘flooring’ swap that word for clothing, imported dry goods, plastics, glass, furniture, anything that came here on a big boat, is likely facing material delays and pricing increases.
BC Construction Industry
This is really a building material / construction update… as everything is dramatically impacted right now by global supply chain issues. Read this article and factor it in for future decisions for BC renovation and construction. Hopefully it sheds some light on current challenges and may save you headaches on your building / renovation journey.
The punch line first:
If you see something you want, and it is in stock, I can not stress this enough… BUY IT! Not tomorrow, immediately. Don’t wait, as it will either be out of stock very soon, or be sold at a higher price. This isn’t about what Word of Mouth Floors sells, I mean for anyone you deal with for anything building related. Flooring, furniture, roofing, pavers, anything that has a component that requires importing, it may be out of stock soon, or sold at a higher price.
Lumber? This is well documented that what was $3 is now $10… if you can find it. Imagine you needed $100,000 of lumber a year ago, that is now over 3x that cost today. Some wood components are 5x higher. If you can get it. The impact to the project is immense.
Windows? Global shortage of glass means delays in getting windows for your project.
Steel… 4’x10’ sheets in January were $28, last month $45, today $60… and by end of the summer they likely become $100. If you can get stock.
Flooring
At our flooring store, we specialize in vinyl, engineered hardwood and laminate flooring. Currently 10 of our top 20 sellers are out of stock. All new stock, when it lands, will be 5% to 20% higher in price. We have orders placed for containers of product, but they are stuck at the factory. One of my factory owner friends says they have 120 containers worth of product sitting in the warehouse in China, unable to ship.
Even more interesting is many of the factories have stopped production, as they have no where to put finished goods. How will that impact global trade in the coming months???
The ocean industry has such a shortage of ocean containers that they can’t leave the factory. Our top two sellers are on the water (meaning they are moving on the ocean right now). So, they plan to arrive in the next couple of weeks. But with port delays of around 2 weeks or more, it could be the end of June by the time we have them available. Our sales team just had a meeting and even for the product that is not arriving for 4 to 6 weeks, they have been sold. The next time we can get replacement stock is September.
As my friend says, who is a customs broker, not in 30 years of doing this business have they seen this type of challenge. It is completely unknown what the next 6 months may look like from a global logistics stand point. I feel optimistic that we are turning the corner in BC with our Covid restrictions… but global trade is going to be impacted for months and quarters to come. When will things in supply chain be back to normal? Winter? Next summer? It is a complete unknown.
Ocean rates: we paid approximately $1,500 for a container from Shanghai to Vancouver in January 2020. The end of 2020 we paid approximately $4,500. We expect rates in June to be over $8,000, and that is just a guess. The availability of container space is so limited, and the cost currently has no ceiling. To be blunt, it is desperate times for global supply chains.
If you can get the material, this means every single square foot of flooring in BC likely has an additional $0.20 to $1.00 per square foot increase due to ocean shipping. The price impact is very real.
Another example of how this impacts BC flooring industry:
Underlayment: for us, we sell a lot of floating floors (a type of installation method). A large percentage of BC renovations use floating floors (this is how all laminate is installed, and how a lot of engineered hardwood is installed). We have seen a shortage of underlayment in the market. Think about this… if you find the laminate floor that you love, it is in stock. You feel great as it’s a win that it was in stock… but there is no underlayment available. You can not have your floor installed. Ugh!!!
Waterproof (water resistant) laminate flooring is very popular in BC. This type of flooring is called a ‘floating floor’. It is a type of installation method, and the only installation method for a click lock laminate floor. To install a laminate floor, you need underlayment.
We have been stocking up on underlayment but the demand is so high, it may not last long. Underlayment is light to ship and is low priced… so therefore it is very sensitive to ocean freight price increases. We expect to see a huge spike in the % increase for this product. It could be as high as 100% increase. If you can find stock. As this material is essential to the installation process, you must buy it to install a floating floor. So this is another factor if you wait to later in the summer to buy for your project. Potentially later this summer all the BC suppliers are out of underlayment. If that occurs, a large portion of the BC floor industry will come to a halt.
This about other materials… I have a friend in the bottle industry. What happens if there is a shortage in global supply of glass?
What other items are vital to the process to complete your build / reno? The accessory type materials can impact your project as much as the core materials.
So, not only is it good news if you find inventory on a product you like today, but, it will be cheaper than what you will pay next month, or by end of summer. It is a win if you find what you like in stock. Take the win and buy it immediately.
Said a different way… remember the toilet paper stock outs last year when Covid first hit? That is now being felt in all aspects of the building and renovation industries. I hope this insight helps you plan your project. I have never written an article like this is 22 years in this industry. The bottom line… if you see what you need, don’t delay. I am fascinated to see what happens this summer in BC. I can promise you the supply chain will be unlike any summer we’ve experienced for decades.
Good luck, hope this perspective was helpful.
Rob
CEO - Word of Mouth Floors