Understanding price increases and the real reason for delays…
It’s pretty fair to say 2020 was a year we would all rather forget, BUT 2021 hasn’t got off to the best start either.
Factories, suppliers and material producers are all increasing their prices by unprecedented amounts, and transport is being delayed by events like the Suez Canal, Brexit and Covid. Here we look at some of the reasons why this could have a knock-on effect for your projects.
With some products seeing increases of over 15%, it’s important to understand what’s driving these costs up.
So, let’s start with one of the main causes, the raw materials.
There has been a huge shortage of various metals like steel and aluminium throughout the 1st half of 2021. This has been caused by transport issues and COVID lockdowns in China. This is where most of the world’s steel is produced and has disrupted the supply chain. There has also been an increase in demand for materials like stainless steel, coming mainly from Asian countries, but the demand is increasing globally which naturally drives prices up, this is along with larger companies stocking up due to reduced availability.
Another of the main factors in steel supply has been caused by COVID causing construction to shut down around the world in 2020, due to a temporary reduction in demand and in turn causing suppliers to reduce output during this time.
As with metal, timber has seen a surge in demand following a volatile market caused by the pandemic. With the USA seeing a huge surge in requirements, and more Biomass power stations being built that consume vast quantities of timber in order to produce electricity and heat. Factor this with a year that didn’t provide the weather conditions required for good tree growth and the amount of timber required simply isn’t available.
This has in turn led to an increase in the price of timber in excess of 20% on previous years.
It has been well documented that there has been a shortage in the chemicals used to produce polyurethane foams commonly used in furniture over the last year. This has been due to global demand being exceptionally high AND Covid having an impact on production times, leading to pressure on supply and high price increases of up-to 40%.
Another key factor that is causing both delays and increases is transport. With the cost of containers increasing ten-fold, the unfortunate blockage of Suez Canal in March, and the implications of Brexit – logistics companies are still playing catchup.
Freight shortages, caused in part by Brexit and the COVID-19 pandemic, have also contributed to increased costs due to increasing demand. The cost of moving both raw materials and finished products has risen dramatically, and the extra cost has been added onto the basic price of materials as a result.
With the above in mind, we expect most orders from European factories to see an average of 2 weeks added onto lead-times, however, some factories are experiencing extend lead-times beyond this – so it’s best to speak with our team about time frames.
We are also working with our supply chain to ensure our prices are as accurate as possible, but with fluctuating prices, quotes may only be valid for a shorter period of time, so it’s best to check prior to placing an order.
Contact the team to discuss your specification and see how we can help you turn your vision into a reality.
Tom is the Senior Marketing & Product Manager for Hill Cross Furniture. He is fascinated by design and likes exploring new and potential trends, whether its form, colour or material. He also has a passion for photography and art, he is quite often found with his camera and exploring the local countryside.