Q1 2025 Market Conditions Report

Our Q1 2025 Market Conditions report summarizes current market conditions, industry trends, and mitigation strategies to make more informed business decisions in the quickly changing construction landscape.

We’ve had a pretty good run of optimism in this report over the past few quarters, so why stop now?

Given the rapidly evolving administrative situation, there comes a point where we must stop adjusting the numbers. It is now time to share what we know to date. Markets rise and fall, technologies boom and bust, policies change, yet here we are again with a general sense of Great Things on the horizon for 2025. We have a stable mix of recently awarded work by Core Market (Healthcare, Advanced Technology, Life Sciences, Commercial, Higher Education) and several of these sectors are primed to exceed our annual work-in-place and sales projections from 2024.

Most industry publications like Engineering News Records, Dodge Construction and the Cumming Group, continue to project a positive outlook. Construction spending is on the rise, and even if the American Institute of Architects (AIA) is projecting a less than optimal trend on Architectural billings wrapping up 2024, we are in a season of building. But how long will it last?

We know what’s on your mind…

Welcome to 2025. The U.S. has a new President, who immediately signed some 20+ executive orders within hours of being sworn in, and a new administration is following closely behind. Varying opinions aside, what can we extract out of the last month with our new U.S. administration? It’s hard to tell, but there are several areas we should pay attention to based on orders issued by the President, from his January inauguration date until February 10th.

Let’s take a look at some of these initial executive orders and determine what we should be monitoring.ⁱ

SYNOPSIS

This order is primarily targeted at managing illicit drugs coming into the U.S. via the Canadian border. Claiming that Canada has not effectively managed drug trafficking into the U.S., President Trump has imposed a 25% tariff on Canadian goods and 10% on energy resources coming into the U.S. It’s stated that if sufficient action is taken, the tariffs could be lifted, and if not, further action may be directed by the U.S. Government. As this is being written, word has come out that these tariffs are on a temporary hiatus.

CONSTRUCTION IMPACT POTENTIAL

If your project relies heavily on Canadian imports, consider factoring in cost contingencies. The U.S. has had a trading deficit with Canada since 2023 (roughly -$70B). Top imports from Canada to the U.S. related to our industry include crude oil ($97B), petroleum gases ($14B), petroleum oils ($13B), aluminum ($7B), trucks ($6B), and sawn wood ($5.5B).

While Canada is the biggest supplier of oil to the U.S., will this be offset by the “Drill Baby Drill” mantra of Trump’s energy independence platform? Oil / petroleum fuels just about everything, so will we feel it on the jobsite? How far down the supply chain is that? We are talking about 25% on the bulk purchase of a commodity that is used on, or to get to, every jobsite.

What about lumber? Canada counts for a substantial 30% of our imported wood products. That said, the U.S. produces about 60% of its own lumber as a $100B industry. Canada exports about $5B of lumber to the states, so it will be a hit, but doesn’t seem to be too catastrophic for most commercial work?

Continue to look at source materials strategically, explore domestic alternatives, and lock in pricing early.

SYNOPSIS

An attempt to keep the U.S. at the forefront of the AI game by placing a 180-day request to key advisors that they will establish a plan to enhance the U.S. policy for sustaining a globally dominant AI position. Combined with the administration’s new President’s Council of Advisors on Science and Technology (PCAST), there is a clear interest in advancing this field.

CONSTRUCTION IMPACT POTENTIAL

While not all data centers are dedicated to the AI space, there is no doubt that this AI boom has created a demand like we’ve never seen before. DPR builds for companies that are leading the charge in this space. If policies lead to investments and enabling legislature allows for scale to occur at an even faster pace, we could see a continued acceleration of an already rapidly growing advanced technology trend.

SYNOPSIS

The stated goal is to fully leverage our domestic and natural energy resources to build up the supply and infrastructure for the U.S. economic stability and national security. This is a lengthy executive order that hits on emergency approvals, development of infrastructure, and the voiding of previous administration's efforts and orders surrounding renewable energy and associated funding reallocations. Avoiding the general focus on production of traditional energy sources, what could this impact at a jobsite level?

CONSTRUCTION IMPACT POTENTIAL

LEED and “Green” buildings aren’t going anywhere. Owners have recognized the positive impacts of a more sustainable workplace and the economy of long-term sustainability strategies. Local building codes have adopted some of these strategies, and architects and engineers are designing to these expectations as a default. This order calls for the revocation of the “EV mandate,” along with a multitude of other past Presidential orders surrounding climate change, the nation’s forests, and federal regulations surrounding such development efforts. With these efforts potentially sunsetting with the federal government, will business owners maintain a path of their own accord? Have they already adopted what was once regulated by law?

The biggest potential win of this order is Section 5, where “Efficient Permitting” is discussed at length. Primarily targeting the ability to advance the permitting process, making it more streamlined and faster, this section wants to remove delays and ambiguity for these projects. There is even a call to expedite Federal permits: “Agencies shall work closely with project sponsors to realize the ultimate construction or development of permitted projects.” If permitting acceleration trickles down to local levels, projects could move faster, reducing holding costs and delays. If efficiency gains are in the air, we are here for it!

There is a host of details inside the orders, but those are a few key extracts.

SYNOPSIS

An attempt to curb the flow of opioids into the U.S., an additional 10% tariff is imposed on all Chinese products.

CONSTRUCTION IMPACT POTENTIAL

In case you are unaware, China regularly produces products at a cheaper price that can undercut a state-side supplier, but they also offer incredible production power and infrastructure. Everything from jobsite tools to air-handler motors to electrical wire to faucets to iron pipe is imported every day into the U.S. from China.

It’s important to note that while this impact can be significant, it’s more interesting to really look at the supply chain on your job. Check your specifications. Know your flow of material.

Will the low-price per unit from China production be offset by this duty applied to the material? It really depends.
If a faucet manufactured in China with a MSRP of $100/unit—and a 10% duty—you got it…$110/unit off the boat. What’s your alternative locally? Is there a comparable faucet in the U.S. for $105/unit that we can align on? Is the extra $5/unit worth it to preserve the design? Possibly. 500 faucets multiplied by $10 isn’t chump-change but is $5,000 a deal breaker on a 500 bed hospital?

So, can the U.S. production exceed the quality and beat the value of our China competition? Ongoing dialogue about customer priorities will help our teams align around what defines value for each project.

Even as we write this, some of these things are being contested in court, countries are responding to the tariff demands, and orders are being put on hold. We are staying informed and not immediately jumping to any definitive conclusions. These orders are being issued at a record-pace and most of them will take months to see the outcome.

Our frontline teams will have the direct pulse of these impacts project by project, which is the only way to understand, “How will this impact my job?”

DPR is here to offer additional expertise and understand these issues. We are not going to be reactionary. That’s not to say these orders will not be enacted; rather, we will see exactly how they pan out on a particular project. Specifically, though, if these tariffs become law and we are past the point of shifting from material suppliers overseas, there could be a very real impact on imported goods.

When we understand our supply chain and are engaging with our customers to identify potential pain points early, we are empowered to make strategic decisions.

As we enter 2025, we are one quarter of the way through the century in a year that also represents a perfect square root. It seems like just yesterday we were concerned that our computers wouldn’t survive the “Y2K” bug. The outbreak of a different bug, the Avian Bird Flu, killed 20 million of the 378.5 million U.S. egg-laying hens in the U.S. in the 4^th quarter alone of last year (about 5.3%). This has stressed the egg supply chain and caused a 39% year-over-year surge in pricing.^{1 2} Red Dye no. 3 was banned in January, leaving makers of Airheads, candy corn, Pez, and strawberry milk to identify an alternative product and supply chain for the coloring.³ Dunkin ran out of certain types of its donuts for a time in early January.⁴ And it was reported that Schneider Electric suffered a hacker attack where the ransom was demanded in baguettes (not the diamond ring type), $125,000 worth.⁵

The stock market had a strong year in 2024, with the S&P 500 having one of its best years ever, up around 25%. Analysts from Bankrate foresee continued growth in 2025 but slowing to around 7% — solid, but not like the last two years.⁶ The Federal Funds Rate has continued to drop since August of 2024,⁷ brought about by improvements in the inflation rate, which hit a low of 2.4% in September, but inflation has ticked up monthly since then and now sits at 3% for January.⁸ However, when food and energy are removed from the inflation calculation, as they vary sharply from month to month, the rate actually ticked down slightly. Coupled with strong bank profits, it caused the stock markets to surge the day it was reported.⁹ The concern now is that these improvements in inflation could reverse if U.S. tariffs are imposed, which could delay further rate cuts by The Fed.¹⁰

The civilian unemployment rate has been hovering around 4% since early 2024,¹¹ with strong results reported for December at 256,000 jobs added, bringing the total number added in 2024 to 2.2 million.¹² This news is tempered in an article related to construction employment from Construction Dive, with Macrina Wilkins, senior research analyst for the Associated General Contractors of America, highlighting a trend of fewer job openings for the last four months, saying: “While the industry is still adding jobs, growth has slowed significantly,” further noting that “This decline underscores ongoing workforce challenges — such as firms struggling to find and hire qualified workers — likely combined with increasing uncertainty about what 2025 will bring.”¹³ According to Associated Builders and Contractors, the industry needs to attract an estimated 501,000 additional workers over the pace of hiring in 2024.¹⁴

In the construction supply chain, things have improved and seem to have returned to a more normal state, but apprehension remains. A recent AEC SmartBrief survey reflected the biggest concerns are labor shortages, inflation and material prices, and supply chain volatility.¹⁵ GEP’s Global Supply Chain Volatility Index, which models supply chain pressure with input from 27,000 companies in 40 countries, is on the rise in all regions except Europe, indicating a tightening of supply chain, citing stockpiling of goods and materials to guard against tariffs in the U.S. and growth in Chinese manufacturing.¹⁶

But overall, contractors remain positive. AGC’s survey of 1,100 contractors showed optimism about the economy — 69% expected to add staff in 2025, compared to only 10% who anticipate headcount to decline.¹⁷ In an article from Construct Connect, several economists offered their insights on the state of the industry. Here are some of their observations:

1. Spending is up, but expected to slow in 2025 to around 5% to 5.5% increase (Kermit Baker, Chief Economist for the American Institute of Architects)
2. More than 90% of contractors reported trouble filling positions in 2024, up from 80% in 2023 (Ken Simonson, Chief Economist for the Associated General Contractors of America)
3. Bidding was up by about 5% in 2024 (Kristy O’Brien, ConstructConnect’s Director of Content Acquisition)
4. Expect to see more hotels, stores, and military projects in 2025 (Michael Guckes, ConstructConnect's Chief Economist)¹⁸

We have a new administration in the U.S., which could influence the construction industry through its policies on tariffs, tax cuts, deregulation, and immigration policy.¹⁹ In the last few months we’ve seen France,²⁰ Austria,²¹ Germany,²² and Canada²³ all have unexpected turnover of their sitting governments, largely for economic reasons. South Korea’s President, Yoon Suk Yeol, has been impeached and arrested after attempting to implement martial law in that country in early December.²⁴

There is continued instability in the Middle East. Syria’s leader, Bashar al-Assad, has been ousted, without a clear path forward of leadership for that nation.²⁵ After a two-year vacancy, Lebanon has elected a president.²⁶ Yemen’s Houthi rebels have attacked more than 134 ships and sunk two in the Red Sea since late 2023.^{27 28} But there is a now a ceasefire in place between Lebanon and Israel, and between Israel and Gaza,^{29 30} in which the Houthis have indicated they will limit their attacks in the Red Sea to only Israeli-affiliated ships,³¹ but with the White House now redesignating the Houthis as a terrorist organization, further outcomes are difficult to predict.³²

Even as the U.S. experienced extreme cold temperatures in January,³³ causing record snowfalls in the south³⁴ and trapping a 663-foot freighter in ice on Lake Erie,³⁵ warming weather patterns have started to make key natural resources accessible in countries within the Arctic Circle, like Greenland. This has created competition between nations interested in those reserves, including Russia, China, and the U.S. In January, there was a bill introduced in the U.S. House to allow the incoming U.S. president to: "seek to enter into negotiations with the Kingdom of Denmark to secure the acquisition of Greenland by the United States."³⁶ But this does not seem like something Denmark is currently considering,³⁷ and Chinese stakeholders already own claims to Greenland's large rare earth deposit 'Kvanefjeld,' which has vast amounts of uranium.³⁸ The Artic Circle is also important to potential new trade routes, with Greenland in a key location for China's 'Polar Silk Road,'³⁹ a plan to expand China’s economic influence as part of their 2013 Belt and Road Initiative (BRI) which includes trade and logistics investment in more than 150 countries and organizations.⁴⁰ This new ‘Trans Arctic Shipping Route’ would save an additional two days of travel time and reduce fuel consumption by an estimated 40%.⁴¹

For land routes, China’s desire to expand its geopolitical influence through trade dependence has it preparing for various scenarios in the event of a prolonged war between Russia and Ukraine, constructing a railway from China to Europe, bypassing the current rail that runs through Russia.⁴²

U.S. intelligence believes that by 2027 there will be an attempt by China to make Taiwan part of the PRC, with the assumption that this will include some degree of armed conflict.⁴⁴ Taiwan is a critical ally of the U.S. for many goods and fabricates nearly one third of the world’s semiconductors, and is the eighth-largest U.S. importer of goods ($44 billion) and the tenth-largest U.S. exporter ($40 billion).⁴⁵ It also has a critical logistics route. In 2022, nearly half of the world’s 5,400 container ships passed through the Straits of Taiwan.⁴⁶ Having control over Taiwan could further bolster China’s influence over the global supply chain for both products and logistics. Outgoing FBI Director Christopher Wray characterized China as the "biggest long-term threat to our economic and national security."⁴⁷ Elsewhere, in Congo, there are internal conflicts for control of minerals like copper and cobalt, which are also of interest to both China and the U.S.⁴⁸

Why is this important?

Currently, pricing has normalized, and materials are readily available, with the notable exceptions of mineral wool insulation, switchgear, semiconductors and certain gauges of copper wiring, but upcoming tariffs could affect this. Aluminum, light fixtures, insulation, lumber, electrical equipment, and semiconductors have seen steady price increases over the past year. The Cumming Group is predicting that the wildfires in Southern California, which destroyed some 10,000 homes, will impact materials like wood and concrete.⁵¹ Steel and steel related products are down YOY nearly 17% as of January⁵² but it is anticipated they will rise with the recently announced tariffs.

Iron ore prices are projected to decline in 2025 due to weak steel demand and ample supply. China's economic slowdown and the possibility of tariffs and other regulatory measures are limiting market demand for ore. The upcoming Simandou mine in Guinea will increase ore supply further when it opens in 2025.⁵³ Lower steel pricing has created instability for several mills and fabricators of steel products.

U.S. Steel has been facing challenges with weakened pricing and softening markets. In 2023 their revenue fell 14% and profits fell 65%.⁵⁴ Nippon Steel proposed an offer to buy U.S. Steel which was blocked in early January by the U.S. Administration, citing national security concerns, but this was challenged and there is now a time extension for reconsideration through June of this year.⁵⁵ Last September U.S. Steel’s CEO said the company will likely close some of its steel mills if the proposed sale to Nippon Steel doesn’t proceed.⁵⁶ There is continued interest from Nippon Steel in pursuing U.S. Steel, as well as interest from Cleveland-Cliffs, Nucor,⁵⁷ and private equity Ancora Holdings Group.⁵⁸ President Trump has voiced his support for Nippon to invest in U.S. Steel, but not as a majority shareholder.⁵⁹

Other steel companies are having issues as well. Posco shut down a rod mill in South Korea,⁶⁰ and ArcelorMittal temporarily halted production of wire rod at its Verinha, Gijon facility in Spain.⁶¹ In the U.S., Liberty Steel temporarily halted operations in a wire mill in Illinois furloughing 500 workers,⁶² and Zemelman Industries’ Wheatland Tube plant in Chicago closed, affecting 237 people.⁶³ Each of these companies blamed low demand and falling prices.⁶⁴ U.S. companies are pointing to oversupply caused by increased imports from low cost countries that are exempt from existing steel tariffs or have quota exceptions (including Canada, Mexico, Australia, Argentina, Brazil, South Korea, the EU, Japan, and the United Kingdom).⁶⁵

The current situation is that new tariffs on Mexico and Canada are paused until March, there is a tariff increase of 10% on Chinese goods and a 25% global tariff on steel and aluminum. Opponents say that tariffs will increase pricing, slow growth, fuel inflation, cause disruptions to the supply chain, and may create trade wars. Supporters believe they are a necessary step to protect American industries, increase federal revenue, bring manufacturing back to the US, and prevent job loss.⁶⁷

First, let’s lay out a bit of history on tariffs over the last two administrations. In 2018 and 2019, tariffs were placed on imports of washing machines and solar panels (Section 201), steel and aluminum (Section 232), and billions of dollars’ worth of consumer, intermediate, and capital goods from China (Section 301). The tariffs generated about $80 billion a year in additional taxes, and most tariffs imposed in 2018 and 2019 were maintained or expanded by the following administration,⁶⁸ with some exceptions and exclusions for certain countries for steel, aluminum, solar panels, and washing machines (which expired in 2023).⁶⁹

From 2018 through March of 2024, it is estimated that total tariffs collections were $233 billion,⁷⁰ with those tariffs ultimately paid by the consumer in the form of higher prices, whether a person or a company. Looking back at the impact of the tariffs, economists from the Federal Reserve have noted that there has been a net negative impact due to rising costs, retaliatory tariffs, and an overall decrease in U.S. manufacturing employment when looking at all sectors taken together (i.e. not only those with tariffs applied). States with more exposure to tariffs experienced lower increases in employment.⁷¹

The White House is signaling the following revisions to tariffs, with responses of retaliatory tariffs being reported:⁷³

1. Chinese Goods: Additional 10% tariff.⁷⁴ In response, China has announced tariffs against the U.S., but more importantly, on 2/4 they have moved to curb exports on tungsten, tellurium, bismuth, indium, and molybdenum, used in various industrial, electronic, military, medical, and alloy applications.⁷⁵
2. Steel and Aluminum: 25% global tariff (it is not yet clear how this will impact prior exemptions or quotas noted above).⁷⁶
3. Mexico: 25% tariff, but this is now paused until early March.⁷⁷
4. Canada: 25% tariff, with 10% on Energy, but this is now paused until early March.⁷⁸
5. Blanket Tariff: TBD, but prior statements reported a potential of 10% tariff on all other imports,⁷⁹ with recent clarifications that target copper, pharmaceuticals and computer chips may also be on the way.⁸⁰
6. Reciprocal Tariffs: TBD, but announced February 7^th to match other countries tariff rates for imports from the U.S.⁸¹

Ken Simonson, Chief Economist of the AGC told Construction Dive that “Costs are likely to rise much faster in 2025,” then went on to add “Many other construction materials are likely to experience sudden price increases if President Trump follows through on his threats to impose steep tariffs.”⁸⁹

Let’s take a look at how tariffs could affect pricing.

Drywall is made of gypsum, paper, energy, water, chemicals/additives, and transportation. Drywall used in the western U.S. uses predominately natural gypsum rock, much of it supplied from Mexico. The rock accounts for about 20% of the material input costs. If there was a 25% tariff on gypsum coming from Mexico, it would impact the price of drywall from the manufacturer by about 5%, so by the time this goes through the two additional steps of the supply chain with added markups (i.e., the distributor to subcontractor and subcontractor to general contractor), the material increase would be around 7%. When looking at the impact to a subcontractor’s turnkey bid, assuming that about 41% of the subcontractor’s bid is material (keeping in mind only part of the material cost is wallboard), this would impact the total cost less than 3%.

Work has begun to rebuild Baltimore's Key Bridge after its collapse in 2024, with an expected completion in 2028 at a cost of $2 billion.⁹² This is crucial for improving freight efficiency in the region, which has been hindered by the collapse. Meanwhile, U.S. infrastructure is facing challenges, with many bridges rated as “fair” and concerns about funding for repairs.⁹³ Ocean container rates have risen due to disruptions like the Lunar New Year shutdown and Houthi attacks in the Red Sea.

The Suez Canal is an important route between the Red Sea and Mediterranean Sea, and accounts for 10-15% of world trade and 30% of global container shipping volumes.⁹⁴ Ocean carriers have been rerouting vessels around the Southern tip of Africa to avoid attacks (instead of the shorter trip through the Red Sea and Suez Canal) which has added up to two weeks and one million dollars more per vessel.⁹⁵ With the Yemeni Houthis likely ceasing attacks on non-Israeli vessels in the Red Sea, there could be a return to shipping in the region by other countries. This would increase speed and reduce cost, but there is also concern that this shift could cause accelerated arrivals and backups at ports creating a “severe disruption.”⁹⁶ But this may be moot, as the Houthis have indicated they would attack U.S. vessels again if there is an attempt to remove Palestinians in Gaza by force.⁹⁷ The White House has indicated an interest in the U.S. taking back control of the canal, which Panama owns and operates, citing strategic importance and rising prices.⁹⁸

Trucking faced significant challenges in 2024, including a 27% rise in cargo theft year over year, weather disruptions, and a “freight recession” due to too many trucks and too little freight.⁹⁹ The Key Bridge collapse added delays, and truckers in New York City faced added costs for entering the Central Business District. Trucking job losses were significant, with 41,000 fewer jobs compared to 2022, though average hourly wages rose above $30 for this first time.¹⁰⁰ Fuel costs could increase if a tariff is put in place on Canada. 24% of U.S. crude refinery throughput in 2023 came from Canada, so a 10% tariff could have a significant impact on fuel costs.¹⁰¹ This could be offset, however, with the recent executive order increasing access to drilling within the U.S.¹⁰²

AI continues to fuel construction and infrastructure demand. JLL reported that it expects continued data center growth through 2027 of 15-20%.¹⁰³ In January, President Biden signed the “AI Executive Order” to allow data centers and clean energy facilities on federal land to bolster AI development,¹⁰⁴ however, this order was rescinded by the incoming administration on January 20^th.¹⁰⁵ Microsoft is investing $80 billion in data centers,¹⁰⁶ Meta is investing $10 billion for its new Louisiana data center project,¹⁰⁷ Amazon Web Services is building an $11 billion data center complex in Indiana,¹⁰⁸ and it plans to spend $10 billion to expand data center infrastructure in Ohio.¹⁰⁹ Emirati billionaire Hussain Sajwani promised a $20 billion investment in the U.S. data center industry in the coming years.¹¹⁰ And President Trump announced that a joint venture between OpenAI, Oracle and SoftBank will invest up to $500 billion to increase AI infrastructure for data centers and power generation.¹¹¹ While not specific to data centers and technology, Saudi Arabia's Crown Prince Mohammed bin Salman pledged a $600 billion investment in the United States over the next four years.¹¹² In January, Chinese startup DeepSeek released an AI model that runs on less advanced chips, leading to speculation on how this might affect investment.¹¹³ As DeepSeek’s AI model could potentially be used in applications that gather data, it may face scrutiny from other countries or companies due to the possibility of using the technology to collect sensitive data or for surveillance purposes, and the U.S. House of Representatives has proposed a bill to ban it on government-issued devices.¹¹⁴

This infrastructure is needed. According to a Goldman Sachs report, a ChatGPT query uses ten times as much energy compared as a typical Google search.¹¹⁵ All these data centers are stretching the capabilities of the electrical grid, spurring some providers to construct their own power supplies for these centers.¹¹⁶ This, combined with extreme weather events like the January fires around Los Angeles and Hurricane Helene in the Southeast, could impact availability of electrical products and drive pricing of related materials higher.¹¹⁷ Currently, it is unclear how the executive order from January 20^th by the White House that pauses the disbursement of funds appropriated under the 2021 Infrastructure Investment and Jobs Act will ultimately affect the demand of these electrical products.¹¹⁸

We’re still figuring out all the ways we can use AI, but it is already being leveraged in many interesting ways, including for construction. Ken Simonson, AGC Chief Economist shared with us that “there is work being done by the U.S. government specific to the Census Bureau to use AI and satellite images to help see new construction starts, with potential enhancements for other information that could provide better real time information on construction activity and types within the U.S.”¹¹⁹ Blyncsy, a software technology subsidiary of Bentley Systems, has developed and released a free near real-time digital map that logs infrastructure assets across the US interstate highway system by collecting dashcam images from networks of fleets driving on the roads daily. You can see things like guardrails, speed limit signs, and work zones to identify areas and items in need of repair.¹²⁰ This could improve response times on repairs and highway safety.

In 2024, our focus included using a modular solution for jobsite office space, which involved international shipping. This required tracking freight, clearing customs, and managing delivery. While not difficult, international shipping does require knowledge of multiple data points and relationships including tariffs, ports, transportation providers, customs brokers, freight forwarders, shippers and receivers. A key part of international shipping is understanding the INCOTERMS, which define who is responsible for costs like transportation, tariffs, and customs.

A problem arose when an air freight shipment needed to support a mega project during the holidays. International shipping during holiday periods, with employees taking time off and during freight arrival, creates the potential of ‘frustrated cargo’ (aka stuck cargo) and additional storage fees.

The shipment, which included connection plates for the modular structures, was sent with the wrong INCOTERM Carriage Paid to (CPT) instead of the agreed-upon Delivery Duty Paid (DDP). This mistake meant we were responsible for customs clearance and tariffs. The supplier had also used an incorrect HTS code, complicating the process further. As a result, the shipment faced delays and storage fees at the airport.

Thanks to our supply chain team’s quick response and collaboration with our customs broker and freight forwarder, we identified the correct Harmonized Tariff Schedule (HTS) number, resolved the issues, and ensured the parts were delivered on time to keep the project mobilization on track.

Photos: Danny Sandler