How much will shipping costs impact rural broadband builds?

Operators across the board have already flagged rising deployment costs related to inflation, geopolitical issues and labor shortages. And it’s no secret that shipping delays of all stripes have plagued construction projects across the nation since the COVID-19 pandemic began. Between international shipping container delays, shortages of truckers, the steady climb of the price of diesel and rising interest rates from the Federal Reserve, it would seem that telecom is slated to take a serious hit in costs in the near term. But how much will shipping contribute to those?

Several American fiber manufacturers appear to have chosen strategic locations to set down their roots. Corning, for example, has three optical cable manufacturing plants in North Carolina. Commscope also has two fiber-optic cable manufacturing plants there. The state is famed for its easy access to points north and south along the Eastern seaboard, as well as straightforward access to the Western half of the country.

Incab America, another fiber-optic cable manufacturer founded in 2017, has its home base in Arlington, Texas. The company solely manufactures various types of fiber-optic cables, with their optical ground wire and dielectric wires proving to be especially popular. Just outside of Fort Worth, it’s arguable that the manufacturer’s strategic location of central Texas has two key benefits: both coasts – and their port cities – are relatively equidistant and various major passageways into the Midwest, Southwest or Plains are readily accessible.

Prior to the announcement of the Broadband Equity, Access and Deployment (BEAD) Program, Incab was already preparing to increase their capacity. But now, the clock is ticking to ramp up production. “We anticipate doubling our current capacity [to meet BEAD needs],” Christian Riddle, a Project Manager with Incab, told Fierce.

But here is the big question: Even with a strategic location, are the shipping prices for fiber products going to cut into the bottom line of construction costs, especially in rural, hard-to-reach areas that are on the docket for investment?

Cables on the move

“Shipping is typically calculated during the [request for quote] RFQ portion of a potential order,” Riddle explained. “Currently shipping is charged at cost. That is to say that no other charges are added beyond what we are charged from the shipping company.”

According to Riddle, most cable shipping on the national scale occurs via truck, though very occasionally products are moved via air or sea freight. Those applications are more costly, with trucks being the cheapest method followed by sea and air. But whether a final destination is in rural Arizona or Phoenix, for example, doesn’t make a notable difference.

“Area doesn’t typically affect the cost, unless it’s extremely remote. Think Alaskan wilderness. Price is a combination of physical distance and weight, as well as the method of transportation [on a] dry van vs. flatbed.”

Typically, Riddle prices goods with around a 5% mark-up for shipping, but depending on the product and the volume it takes up, that upcharge can shift as low as 2% or as high as 20%. For Incab, it’s an even split between products shipping straight into the field on an aggressive schedule and those going into warehousing facilities for inspection and procurement purposes first.

The larger challenge Riddle sees is building out extra time into frenzied construction schedules to allow for potential delays. It’s those delays, not the cost, that tend to be larger points of contention. If materials must go directly into the field, significant man-hours go into communications between manufacturer and laborers for engineering support.

All in all, for all of the headlines about logistics concerns in the United States, Riddle does not believe that the various factors at play will make a meaningful difference in the cost of rural build-outs for BEAD.

Asked for more details about its shipping procedures, a Corning spokesperson said only “we work with an extensive network of distributors and transportation partners to help our customers get what they need, wherever they are.”