Freight All Kinds: Logistics Of Commercial Construction

We often see large flatbed trailers with "oversized load" labels hauling big, bulky construction products, presumably on the way to a new construction site. But often the companies transporting these items are not your normal carrier.

The millwork factories that produce large items like roof trusses and wall panels sometimes find themselves in the shipping business — more specifically the trucking business — out of necessity.

Annandale Millwork & Allied Systems, located about an hour northwest of the D.C. beltway, is one such "carrier." The company builds some of the larger items needed on any commercial construction job site — roof trusses, floor systems, wall panels and architectural millwork. It is also a distributor for interior and exterior pre-hung doors and windows.

The delivery of this freight is largely as imagined. The large wooden frames and commercial construction components are loaded onto a tractor-trailer (flatbed trailer) using forklifts, or by boom lifts mounted to the truck. The loads are then secured with straps for delivery to the site. Other items like millwork are typically loaded by hand into dry van trailers for delivery.

Mobile tower crane unloads open web floor joists from a flatbed trailer – Image: Hourigan

A representative with the nation's largest supplier of structural building products and components, Builders FirstSource Inc BLDR, said most of their larger shipments are sent direct from the mill or distribution center to the job site, assuming the site has ample "laydown" area, or space to accommodate the materials. Otherwise, materials are sent directly to one of the company's more than 400 local locations for storage and then delivered on a straight truck with a moffett (truck-mounted forklift) to the job site when needed.

Annandale Millwork & Allied Systems' shop operates like most factory facilities, attempting to align production schedules with delivery dates to minimize inventory. As such, the company adjusts its fabrication plans around the builder's specific job site construction schedule as reasonably as it can.

Rob Frogale, co-president of Annandale Millwork & Allied Systems said that "just-in-time" production is the key. One of the company's biggest hurdles is accurately aligning fabrication to coordinate with construction activity at the job site. Weather and permitting delays are the main reasons for changes in production schedules, although Frogale said that has improved significantly in recent years as most commercial builders are now using scheduling software, providing visibility to both builders and suppliers on any given project.

There's a real cost involved when the delivery of finished product is delayed — one that the company doesn't want to pass through to the builder. Frogale said most shipments are planned a week in advance and that the company recently added coverage storage space for finished product when just-in-time deliveries are delayed.

More and more building supply companies are handling their transportation needs in-house.

Annandale Millwork & Allied Systems utilizes a fleet of roughly 15 leased tractors and 50 specialty flatbed trailers that allow the construction materials to be unloaded by rolling the freight off of the trailer onto the ground. Frogale said the company used to own its tractors but likes leasing the equipment because its lessor provides a replacement truck when one in the fleet has a breakdown or needs maintenance.

Additionally, the company owns a dozen dry van straight trucks.

Builders FirstSource uses a fleet of roughly 4,500 trucks and company drivers to facilitate delivery of its products. The company prefers to ship using a tractor-trailer (flatbed), but noted that it can't use this equipment in some remote areas that lack sufficient roadways or in mountainous areas.

Annandale Millwork & Allied Systems has 25 company drivers on the payroll to facilitate delivery throughout its geographic footprint from south New Jersey to the Tidewater area of Virginia. However, when capacity is needed, they contract it out to a group of owner-operators they work with somewhat regularly or through a third-party brokerage relationship.

Frogale said transportation prices have increased substantially, with the per hour cost of employing company drivers increasing more than 30% in recent years. He noted that driver wages have leveled off recently and that it has been a "little easier" hiring new drivers over the past eight months as capacity isn't as tight as it was in recent years. Per-mile expenses on the loads they contract through a third-party carrier, roughly 10% of all of their shipments, remain elevated as well.

When it comes to compliance, both companies see the same restrictions in play as any commercial carrier would. For Annandale Millwork & Allied Systems hours of service don't provide the headwind that most over-the-road carriers deal with, as most of its deliveries occur within a 75-mile radius. However, Frogale notes that the conversion to electronic logging devices presented some challenges.

Frogale has looked into a dedicated carrier offering but believes there are too many variables on most of their shipments. He said most third-party carriers perform well on the point A to point B movements. However, loads headed to a destination where the infrastructure isn't permanent or where roads haven't been built, like most commercial construction sites at least initially, make it a little riskier to contract a driver without specific knowledge about the freight and destination. Further, the company has its drivers take pictures of the delivered load to show that the products were in good condition upon arrival.

Asked about construction demand and their business activity levels, Frogale said activity is up about 20% in the past three years and noted that the markets they serve remain very strong. He said demand for new apartment complexes and single-family-dwelling townhouses has been robust.

On a recent job in Virginia, Frogale said roughly 150 truckload shipments were moved from its facility in Winchester to the construction site. This project was for a large commercial and residential portfolio owner and operator that was constructing five buildings, roughly 300,000 square feet of apartment living space.

Total U.S. construction spending (non-residential) was $781 billion on a seasonally adjusted annual rate in November, according to the U.S. Census Bureau. This is near the recent peak of $795 billion in April 2019, which is considerably higher than the prior run rate peak of $719 billion in October 2008. This cycle's low was $509 billion in February 2011.