Freight costs, particularly shipping, up nearly 100 per cent in six months - new survey. Photo / Paul Taylor
Freight costs, particularly shipping, up nearly 100 per cent in six months - new survey. Photo / Paul Taylor
A survey of the building sector and Covid's effects on the struggle to get goods to New Zealand said freight costs were up almost 100 per cent in the last six months.
The Eboss construction supply chain report out today cited the results of responses from 240 businesses supplying structural,interior, finishing, external and other materials.
"Freight costs, particularly shipping, have increased almost 100 per cent in the last six months," one respondent said.
Supplies of building materials were "at the mercy of imported products" and even New Zealand manufacturers were heavily reliant on imported materials.
"Given the situation with freight and staffing, lead times are likely to continue to increase," the study said.
That found 90 per cent of construction products sold here were either imported finished products or manufactured locally from imported components, and 91 per cent of those who rely on imports say they're experiencing issues supplying the market, compared to just 58 per cent for those wholly reliant on domestic supply.
"The challenges surrounding imports are multi-faceted. They include the cost of freight and insurance, the availability of freight, the lead times of freight for getting out of ports and the delays at New Zealand ports," the study found.
Cost pressures from increased freight cost and management of freight were having a big impact on supplier cash flow.
Demand aspects of the sector were hit with big price rises in the last six months but the full impact of supplier cost increases had not been realised yet.
Costs will rise further.
"Ultimately, we believe that the true impact of price increases has not been felt by clients and property owners. Suppliers are squeezing margins and looking for cost efficiencies elsewhere to try to keep price increases to a reasonable level.
"At some point, these efforts will start to impact supply. We need to work together with suppliers to ensure we have a sustainable and competitive supply chain beyond the next 6 to 12 months," the report said.
The new Eboss report follows BDO's survey, also out this month.
BDO said last week material supply shortages of at least two months were hurting the Covid-hit construction sector, running at maximum capacity and which has consents for $26 billion worth of annual residential and commercial work.
James MacQueen of BDO said the survey found delays in getting goods were the sector's biggest problem. That report said "56 per cent of respondents report delayed projects due to delayed receipt of materials and of 32 per cent of delays due to this exceed two months".
The construction sector is running at full capacity. Photo / Supplied
In May and June, BDO got 150 replies from shareholders, directors and senior staff in housing and commercial, split between head contractors, subcontractors and others including consultants and architects.
Today's Eboss report said demand was ramping up here and overseas: with vaccination uptake levels reaching critical milestones and countries opening up after lockdowns, the construction demand surge was global.
"The US is working on the basis of a 15-year housing boom, and both China and India expect construction demand to grow by around 12-13 per cent," it said.
Stats NZ data is also showing record numbers for residential and non-residential consents granted, totalling about $26b worth of work annually.
The report said the response or solution should not be stockpiling products or fear-mongering.
Instead, a concerted effort should take place for better cooperation from suppliers, architects, specifiers, builders, industry stakeholders and the Government.
