We are at crossroads and within an arm’s length to falling off a cliff towards the disparity between supply and demand of raw materials. The stimulus-fuelled demand for real-estate and straining supply chain as disruptions continue to pose challenges globally is coming up to an almighty squeeze as raw materials are being depleted at a rapid rate. This will have a significant impact on various industries with the construction industry being the centre-piece of the crisis.
Supply shortages like timber and steel are just some of the many materials that are heavily hit by the global logistical chaos. At the current rate of demand for real-estate and renovations driven by government level incentives, supply shock will begin to take shape causing an unprecedented surge of prices in basic materials. Many consumers and even companies oblivious to the crisis unfolding, will likely be cut short as there are no signs of demand easing in the near future.
As the supply squeeze continues and the backlog of shipping and logistics projected to worsen, it is a matter of time before the end consumers feel the real impact of time delays and price hikes, if it has not been felt already. How can such risks be mitigated in the short to medium term? Below are a few ideas to consider:
- Be in front of the line: building or renovating? Get in earlier than later and lock in on prices before the hike. Companies are already re-evaluating and analysing possible price increases in the near-term, if they have not already. This could be one of the last windows of opportunity.
- Choose a reputable builder / contractor: in times of uncertainty, it is important to go with a reputable party to carry out works. Tough times breed resilience, but also causes the not-so-resilient to fail and be left behind. Ensure ample due-diligence is carried out, especially prior to a big contractual commitment.
- The art of timing: does it have to be done right now? If not, it may be a viable strategy to hold-off until the economy stabilises with demand / supply striking a more acceptable parity level. Turbulent times can come anytime, but they also do not stay forever.
- Keep your ears peeled: with inflation set to make an impact, are there impeding global deflationary events also set to trigger, countering the rising inflationary tide like it has many times historically?
With heavy clouds of uncertainty lingering on, we can only draw certainty towards a fundamental conclusion: the global supply chain is struggling, and it will impact all industries and sectors worldwide.