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Lumber Industry is Riding Seesaw of Supply Chain Instability

“Unprecedented” is the best way to describe the volatility in today’s global supply chain. Our business clients and wholesalers who ship lumber, cleaning supplies, fresh produce, computer chips, vaccines, and a host of other goods face the challenges of rising product and transport pricing, product shortages, port congestion, and limited transportation capacity. Those “hits” to the speed and reliability along all supply chains just seem to keep on coming.

Most notably, the “big picture” changes daily.

One good example is the lumber industry. “As an integral part of the lumber industry’s supply chain, we’re monitoring these developments closely and doing whatever we can to minimize the impact and make logistical adjustments to assist our lumber supplier and wholesaler clients,” emphasizes Omar Zambrano, COO, Prime Group, who oversees operations for the company’s Miami-based Prime Logistics division.

Robust Industry Demand

Fortunately, the lumber industry is seeing some positive housing indicators from the U.S. Census Bureau and the U.S. Department of Housing & Urban Development.  “Those agencies report robust new residential construction based on three factors – authorized building permits, housing starts, and housing completions,” Zambrano notes.

Lumber demand has outpaced supply over the past year as consumers desire bigger homes, many of whom new construction, and adults working at home have dived into DIY (do it yourself) projects. Americans in droves spent their stimulus checks on such projects, while some city dwellers opted for new second homes in the countryside.

But that soaring demand for lumber and plywood too has been coupled with other factors causing the “perfect storm.” Those include pandemic-era production cuts, rising oil prices, reduced worker output, limited truck availability (due to driver shortages, and government shutdown orders at domestic and foreign lumber mills.

Crazily Rising Rates

Shortages of freight shipping containers and pallets (also with higher costs for both), plus limited capacity in general for shipping also have impacted the supply chain and caused crazily rising transport costs for air, ocean, and land shipping. Supply Chain Dive, a top logistics-industry publication, reported that record-breaking lumber prices and supply restrictions have impacted everything from home building to book publishing.

Previously, the National Association of Home Builders (NAHB) reported that, the average price of a newly constructed single-family home has increased by about $36,000 since April 2020. Right now, 3,000 U.S. sawmills are again operating at full capacity, so the cost of lumber, which had soared from $350 to $1,600 or even more “per thousand board feet” during 2020 and into the first half of 2021 has dropped in recent months. Yet, many believe the roller coaster of lumber price changes could continue.

As a veteran logistics expert, “Prime Group knows all too well that marketplace pressures and pricing volatility remain for all types of shipping – whether it’s air, ocean or land – and across many industries,” says Zambrano. In addition to pricing and delivery issues that customers are experiencing, his logistics team is dealing with the ripple effect of ongoing port congestion.

No Time to Stock Up

One telltale sign of the disruptions is that importers accustomed to having several months’ worth of inventory stocked in warehouses are now writing up orders to ship those goods out immediately to the retail-store shelves as soon as they’re removed from shipping containers. “It’s mindboggling in many ways,” he reports.

Zambrano points to struggles across the board that Prime Logistics’ customers are realizing daily. In addition to lumber supply-chain customers and wholesalers, those clients include manufacturers and distributors of biotech supplies, chemicals, and pharmaceuticals; aerospace and automotive parts; perishables and temperature-sensitive cargos; project cargos; and hazardous materials, among others.

Go-To Spots Get Spotty

In one example, after many Chinese factories shut downs given the pandemic, and the annual Chinese New Year holiday shutdowns last year (and now again on the horizon), some of Prime Logistics’ business clients and wholesalers began to view alternative manufacturing markets such as Vietnam as the “go-to spot” to help fill supply voids. But just as clients got comfortable with the new supply chain arrangements, Vietnam then issued stay-at-home orders.

So, on a daily basis, Prime Group’s logistics experts are helping customers “pass, punt, and kick” to keep their product moving – and advising them to order early and often, if they can afford it.

“Fortunately, Prime Logistics supports its customer in shipping commodities via land, air, and ocean to and from virtually any destination,” stresses Zambrano, “and this year, those relationships are proving invaluable as logistical plans often must be changed quickly.”

Based in Miami, the company supports customers from its headquarters offices in Doral as well as Los Angeles and New York in the U.S.; Quito, Ecuador; Bogota, Colombia; and Amsterdam, the Netherlands – and via hundreds of representatives worldwide.

Communications is Key

That business “scope” is important as experts say that in some industries, adequate goods and shipping capacity won’t be “right-sized” until 2023 or beyond. One fact is clear, says Zambrano: “The supply chain challenges this year are unprecedented and may continue into next year too.”

He believes regular communication with suppliers and regular communications to clients is absolutely critical for business operational success on all sides: “Let’s champion flexibility and forward planning as we work closely together to find solutions for a fast-evolving business marketplace – one that seems to change by he hour.”

About Prime Logistics 

One of the four divisions of Prime Group, an international logistics services conglomerate founded in Ecuador in 2001, Prime Logistics serves to streamline, optimize, and expedite freight to and from the U.S. for a wide range of major industries.

With offices in Miami, New York, Los Angeles, Bogota, Quito, and Amsterdam, Prime Logistics capitalizes on its long-time relationships with the major air carriers and ocean lines, to offer competitive rates in securing ample space to destinations all around the world.

For information, call 305-592-2044 or visit www.primelogisticsgroup.com.

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