FEATURE
shipping delays compound production delays due to lack of raw material inventory or lack of consistent labor . We spoke with a manufacturer recently who has stopped accepting hospitality contract orders because his production lead times make him uncompetitive . His lead times are driven by his lack of consistently available labor .
Chip McIntyre : Our customers are experiencing similar challenges that others in the hospitality industry are experiencing . A benefit for our customers is that our sourcing team is working every day with manufacturers and distributors to mitigate the impact to our hotels ’ operations .
For food , the impact is that manufacturers are making fewer products and having difficulty keeping up with demand . This means that hotels may find the need to substitute their normal items either temporarily or permanently .
For rooms products , the main challenge is that manufacturers are still trying to catch up with very high demand . The good news is that occupancies have been stronger than many expected , but the downside is that supply is very tight for many items , including textiles and amenities . The implication for customers is that they may have to buy substitute products , or their normal items may be on back order and they will have to wait to get the product they would like .
Jerry Zeitner : There is a lack of resources throughout the entire supply chain that has caused freight pricing and lead times to reach all-time highs . It goes all the way back to vendors / suppliers having trouble getting raw materials due to the lack of freight containers and trucking resources – once product is completed , these same constraints exist to get product moved to project sites . Additional constraints exist at Ports of Entry with limited resources available to bring product through customs .
We are seeing ‘ typical ’ leads times at 3x previous lead times for products and freight costs are about 250 % -plus higher than traditional costs . This puts a huge strain on budgets and schedules for our clients as project budgets and schedules are typically done 18 to 24 months before we get to the shipping in a project .
Chas Hyatt : It is hard to comment on some items such as how long these issues continue as it ’ s a deeper macro / global conversation . We are simply adapting where we can , focusing on things that we can control and building in additional time ( and maybe even a little extra !) for projects . All of this underscores the importance of managing expectations across stakeholders .
Erica Slaw : Like everyone , we ' re experiencing longer timelines , higher raw material costs and higher transit costs . In some ways , the cost increases can be easier to manage than the delays . For example , we often work with our design partners on creative cost savings that allow us to reallocate budgeted funds to help offset high transit costs .
The current longer and unreliable timelines are tough . Many of the delays are , of course , coming from transit times and port congestion , but that ' s only part of it . All phases of production are elongated . Getting quotes can take twice as long as it used to due to staffing shortages – sometimes a result of companies that downsized and haven ' t fully rebuilt and sometimes the result of production facility shortages due to COVID protocols . Then , once we get through approvals and are in production , it ' s not uncommon to get a call that a warehouse has been shut down indefinitely due to a COVID outbreak . When we add up pre-production delays , plus production delays , plus transportation delays , if we don ' t have that time built into a schedule the impact on business is very challenging .
Shahid Javed : There is shortage of products and goods , along with related services and labor . Many factors have contributed to the shortage in the industry – raw materials as well as packaging , lack of qualified labor , and backlog in the ports to clear products imported from the Far East .
H : How long will this last ? Long : We anticipate that the effects of the supply chain shocks will continue into late 2022 .
McIntyre : We aren ’ t able to put a precise date on the recovery because there are so many variables – namely labor at manufacturers and distributors , how soon transportation bottlenecks clear , and how strong occupancy is in 2022 .
Broadly , though , we see food in pretty good shape now , albeit there will be some products that will need to be substituted and there is a great deal of inflationary pressure .
We expect rooms products ( and other items imported ) will stabilize in the spring and return to a more normal level ( i . e ., there is safety stock in the supply chain ) during the summer . Rooms products also have inflationary pressure .
Zeitner : I don ’ t think we have clarity on how long it will last . I would expect to see a short term , small reprieve after the Chinese New Year as there will be less containers moving from Asia to the U . S . This will create an opportunity to return shipping containers to Asia and provide a little relief in pricing . I expect it to be short lived , however .
Slaw : We all wish we knew . For now , and the next two years of projects , we ’ re assuming cost increases and production / transit extended timelines aren ’ t improving .
62 hotelsmag . com March / April 2022