HVAC contractors and plumbers continue to face supply chain woes like material shortages and rising costs.
Battling these issues is making it tougher for HVAC contractors and plumbers to meet their customer’s demands in the short term and perhaps even longer. Here’s what HVAC contractors and plumbers can do to rise above.
WORK WITH MANY SUPPLIERS
If current suppliers can’t meet your needs, then it’s a good time to explore other ones. Many suppliers are ready to strike up new relationships and may be willing to be more flexible with contracts. Shopping with multiple suppliers will not only gain you access to more resources but can offer you more varied pricing options to consider.
CONSIDER ALTERNATIVE MATERIALS
It might be worth checking into other materials as they may be easier to get your hands on. Considering other brands of materials or equipment can keep your projects from staying stagnant.
COMMUNICATION IS KING
In difficult times like these, communication can be something that gives your company a competitive edge. Not only is it a vital aspect of a successful business, but it helps build trust and long-lasting relationships. While no one likes delivering bad news about backorders or delays, keeping your customers informed will go far, as they’ll appreciate your honesty and transparency.
IMPROVING CUSTOMER SERVICE
While material shortages and delays are out of your hands, great customer service will keep your current customers and help you gain new ones. In addition, extra attention to customer service can help address any frustrations among your customers. While these challenges may not last forever, your reputation will, so make sure yours remains good, if not great.
PRE-ORDER MATERIALS AND EQUIPMENT
Many HVAC contractors and plumbers often only order the materials and equipment as needed. Instead, plan and stock up on the materials you most often use for your projects. This way, you’ll have what you need ready instead of waiting for materials to deliver.
CONSIDER MODE DIVERSIFICATION
Trying different modes of transportation could help you offset your increased costs. Keep an eye on transportation costs across the different modes available. Being more flexible with your freight shipping can give you some financial benefits.
INVEST IN TECHNOLOGY
Logistics technology, like a transportation management system (TMS), has tools available to help you stay on top of your supply chain and plan efficiently. One example is helping you with your routing decisions by matching your freight with the best carriers, lanes, rates, and transit service. It will also enable you to better track and manage any service disruptions or shipment delays in real-time, thus increasing your service levels and improving your customer relationships.
THINK ABOUT ONSHORING
Onshoring is a strategy that HVAC contractors and plumbers can use to mitigate supply chain woes and improve competitiveness. Onshoring strategy can ensure resilience in your supply chain and give your company a competitive edge.
Onshoring refers to the overall practice of moving manufacturing operations from foreign soil back to the United States or outsourcing to domestic contract manufacturers rather than overseas. An example of onshoring would be having operations moved to Mexico versus China.
Onshoring allows your supply chain shorter travel times since materials and products are much closer than if they were overseas. This not only keeps your projects moving that much quicker but reduces your transportation costs. Additionally, you’ll also have the benefit of being greener due to less fuel being used.
CONSIDER OUTSOURCING YOUR LOGISTICS
According to the 2020 Annual Third-Party Logistics Study, 67 percent of shippers stating using a 3PL contributed to reducing their logistics cost, while 83 percent said it improved their service. By outsourcing to a 3PL, like Trinity Logistics, you won’t have to spend hours worrying about your logistics and get the help you may need to be more flexible with your shipping options.
“In this market where it’s difficult to meet demand and project deadlines due to material and product shortages, it may not be the best option to send it via LTL as you may save a few dollars on the front end but pay for it with extended estimated transit times, and the possibility of the parts being damaged as they go from terminal to terminal throughout transit. Working with a 3PL, like Trinity Logistics, can bring you other possibilities on how to move your freight efficiently, such as dedicated full truck options, expedited (straight trucks/sprinter vans), partial, and hot shot options to keep your freight moving to arrive on time so you can achieve your project deadlines.”
– Michael Whitaker, Business Development Representative at Trinity Logistics
If you’re looking for a reliable 3PL provider to help with your HVAC supply chain, consider Trinity Logistics. With Trinity, you gain a Team of experts to help optimize your supply chain, help arrange shipping using other modes, and end-to-end visibility through our available technology.
DISCOVER TRINITY LOGISTICSThere’s been a lot thrown at supply chains lately. The up and down Covid-19 surges, material shortages, increased consumer demand, and more. And we can’t forget to mention other factors like the new covid variants, port congestion, and dock delays.
Many of you might be wondering what Trinity is doing to stay agile during these supply chain bottlenecks. Let’s first quickly dive into what the supply chain is currently facing, and then we’ll go into how Trinity keeps moving forward.
Current Supply Chain Bottlenecks
Labor Shortages
I’m sure you’ve heard and seen all the effects of the labor shortages today. Whether the companies are big or small, or in fast-food or logistics, every single industry is facing this issue.
Over the past 22 months, businesses have been hit hard with workers’ pandemic-related absences. According to an analysis from the Integrated Benefits Institute, these absences have cost employers more than $78.4 billion. That’s nearly $1 billion every week.
Along with this, the new omicron variant is leading to more staff shortages as people take sick leave and suppliers navigate new restrictions. This includes factoring in China’s zero-COVID strategy, which is likely to continue to disrupt both production and transportation of goods, possibly for the entire year.
However, backorders in many sectors have been filled, but consumer demand may well be cooling now that furloughs have ended, and interest rates are beginning to rise. So, some companies might end up with an oversupply of goods after everything is said and done.
While some people thought that these issues would stay in 2021, the start of 2022 is showing no signs of slowing down these disruptions.
The beginning of this year has been filled with high levels of return volume from the holiday season, along with the suspension of air on-call pickups for packages. All these issues are mixed effects from weather, omicron, labor shortages, and more.
Struggling to Keep Shelves Full
A direct effect of the worldwide labor shortages is businesses struggling to keep shelves stocked. While Covid-19 rampages across the country, it’s not just healthcare and hospitality businesses feeling the effects. Grocery stores are getting gut-punched by the virus as well.
Product shortages have been widespread throughout these 22 months of the pandemic. These shortages have varied in many different products, from toilet paper and hand sanitizer to different types of meat to even bread and soda. As a result, empty shelves have returned at supermarkets as grocery employees call out sick and truckloads of food arrive late.
While all companies feel the effects of empty shelves, shipping companies, like FedEx are especially struggling with on-time delivery of packages and products due to the massive truck driver shortage nationwide. Unfortunately, the only solution currently for these issues is time.
Ongoing efforts are continually in use to increase the recruitment and retention of truck drivers to combat these supply chain issues and stop bottlenecks from occurring.
Struggling Imports
Port congestion and backup is another huge issue facing the logistics industry and the entire world right now. Ports worldwide are seeing high wait times and a lower percentage of on-time delivery. In addition, many containers and ships are forced to dock and wait until they can be unloaded due to labor shortages.
Although many different countries are facing this congestion and delay, no other is struggling more than China. Covid-19 flare-ups in China are straining supply chains as authorities tighten movement restrictions in various cities to stamp out the virus.
Ningbo, a port city of around 8 million, is dealing with a partial lockdown. Its Beilun district has been especially hard hit, and that’s spelled major problems for the shipping industry. According to The Loadstar, “Many truckers live in Beilun, and there are complicated Covid-19 control policies there, so it’s extremely difficult to bring containers in or out.”
With the Chinese New Year approaching, some cargo has been rerouted to the Port of Shanghai, which is already congested, The Loadstar reported. In addition, many smaller shipping services providers have already suspended operations this year ahead of the holiday, which starts on February 1st.
No Signs of Slowing Consumer Demand
As of right now, however, demand is stronger than ever and shows no indications of an immediate post-holiday crash. As a result, changes on the demand front are likely to be slow and steady, leading to gradual market shifts over the next several months.
Combined data from the OTVI and the OTRI indicates that accepted volumes were up three percent year-over-year in early December. Additionally, tender rejections are currently down about 25 percent year-over-year. Rejection rates are at their lowest levels since July 2020.
Decreasing tender rejections indicates that freight is being moved at contract rates, which is a hopeful sign for shippers. Still, with a rejection rate of over 19 percent, strong demand and constrained capacity continue to stress the market.
Unfortunately for shippers, spot and contract rates have continued to climb as demand surges, shortages drag on, and peak retail season continues. In early December, dry van spot rates rose to $3 per mile for the first time ever. Likewise, dry van contract rates reached an all-time high – $2.96 per mile – simultaneously, according to Arrive’s December market update.
Shippers that can create more flexibility in their transportation strategies will fare best as conditions gradually improve in the upcoming year. Moving away from annual RFP’s in favor of shorter contracts, one-way shippers can take full advantage of any upcoming rate drops. While these shippers are also exposing themselves to slightly more risk in the event of unexpected rate hikes, taking a chance might pay off in 2022.
How Trinity is Here to Help
Keep You Updated
At Trinity, we make sure we keep you up to date on all the industry’s information and news. We provide:
- our monthly freight market updates
- weekly news updates
- monthly customer newsletters with industry-specific updates,
- communications from your representative.
Giving You The Trinity Experience
Along with giving up-to-date news and information regarding every industry, we are also here to provide you with exceptional service and communication, especially when facing these bottlenecks.
Hear from some of our Team Member Experts on how Trinity is staying agile during these times:
- “Labor Shortage at the shipper or receiver due to COVID outbreak and/or protocols – day of pickup or delivery. Not a whole lot we can ‘solve’ but providing everyone involved with a friendly, calm, timely, communication goes a long way. We often talk about drivers but one area of our industry that seems to get less press are those shippers/receiver teams. The good ones are gold baby!” – Benjamin Bowne, Sales Executive
- “I would echo Mr. Bowne’s assessment. Handling the conversations with carriers, customers, and warehouse alike with care and empathy goes a long way. Everyone has been impacted over the last year by the pandemic, it’s the experience that our overall Team provides throughout the transaction that has proven invaluable. This is echoed in the feedback we have received from all the parties throughout the pandemic. We care about what we do.” – Chad Eckland, Director of Sales
- “We are being more agile by focusing on internal as well as external adjustments. A large percentage of our staff are working remote to avoid being short manpower due to illness. Those that are in person are participating in higher safety standards within each location. We are asking customers what are their Covid standards, when applicable, and how they are adjusting so we can conform to their needs. We are checking on trends for spiking locations across the U.S. to see how it will affect imports/exports and its affects of capacity in that area. This is a little harder to do but definitely on the radar. If a shipper/receiver is affected, then we prompt carriers to know what expected delays may occur while costing that into what we are offering carrier.” – Tony Austin, Director of Sales
- “In addition to all the good points already mentioned, I would add that even though I always try to consider any and all viable solutions for my customers, I do a little extra now, because of the circumstances, to help educate customers on conditions, market changes, expectations, and challenges. In addition, I emphasize that I do look under EVERY rock to help them get their freight moved by leveraging all of the modes and resources we have available, as well as be thorough in understanding the factors to be considered in moving their freight (flexibility in dates, rates, modes?). I feel like we have more detailed and personalized conversations, and I provide an added level of insight to show customers that I am truly being a partner to help them through this difficult time.” – Kimberly Meadows, Sales Executive
We Are Experts
While this may be our first pandemic, after 40 years of being in this industry, it certainly isn’t our first season of supply chain disruption, high freight volumes and rates, or tight capacity.
We are well versed and experienced in many different situations, and we know when and how to pivot quickly and keep business moving forward. We follow through on our efforts. When issues arise, we work until they are resolved and keep open communication every step of the way.
We Help You Plan
You can always use your Trinity relationship to discuss current and upcoming projects. This helps us give you things to look out for to keep your transportation aspect of business more stable and reliable.
Having a solid relationship with an expert like Trinity will prove to be your largest asset no matter what supply chain bottlenecks you may face.
If your ready to get support in your logistics with Trinity Logistics, no matter what issue the supply chain has, lets get connected.
By: Christine Morris