Modular Construction Market to Surge Amidst Rising Transportation Risks
The modular construction industry is on a robust growth trajectory, with its market size projected to hit $64 billion by 2024. This construction method involves manufacturing standardized, prefabricated units in off-site facilities, which are subsequently transported and assembled at construction sites. Despite its expansion—particularly in the Asia-Pacific region—this sector faces challenges, including rising logistics costs and transportation risks.
According to WTW, the modular construction market, valued at $63.76 billion in 2024, is expected to surge to $97.13 billion by 2029. Urbanization plays a pivotal role in driving this growth, as global housing crises are intensified by high interest rates, inflation, supply chain disruptions, and labor shortages. Modular construction presents a viable solution by offering cost-effective, time-efficient, and sustainable building practices, while also mitigating the effects of labor shortages.
The value of individual modules can be substantial, with some reaching up to $400 million. Even smaller modules, when shipped together, can aggregate to high values. This highlights the critical need for comprehensive Project Cargo Insurance coverage to protect against potential losses.
Transporting these large and heavy modules poses significant logistical challenges, often requiring specialized vessels or barges. Any damage or loss during transport can lead to project delays. As modules are frequently shipped late in the construction schedule, delays in resourcing, refabricating, and reshipping can adversely affect project timelines. Consequently, extending Project Cargo Insurance to cover delay risks has become increasingly vital.
WTW emphasizes the importance of effective communication among all stakeholders involved, including manufacturers, contractors, engineers, and site personnel, to ensure smooth operations and mitigate risks associated with modular construction projects.
