supply chain update: Product availability and prices in flux

The disposable gloves, aprons, and bags categories are experiencing 3 very challenging market conditions simultaneously, creating volatility in both pricing and product availability:

1) Increasing Ocean Freight Rates

  • Already unprecedented ocean freight rates continue to increase, adding to the costs of products shipping from Asia to the U.S.
  • The incremental cost for a case of gloves, aprons, or bags can be substantial:
    • Whereas a container shipment was around $3,000 pre-Covid, that same shipment could be $20,000 today.
    • For a container with 3,000 cases, the incremental ocean freight expense adds $5.67 in cost per case.
  • Any relief is not expected until after the Chinese Lunar New Year holiday, which begins February 1, 2022.

2) Shipping Delays

  • Major bottlenecks out of Asia are causing shipping delays. U.S. port congestion and intermodal transportation (rail) delays are also adding to lead times.
    • Importers may experience sporadic product outages due to delayed containers.
  • Increasing COVID-19 cases and lockdowns in Asia have the potential to cause port closures and manufacturing capacity reductions/shut downs.

3) Softening Prices for Vinyl, Latex, and Nitrile Gloves

  • Rebounding overseas manufacturing capacity and lower medical glove demand in the U.S. has softened prices for vinyl, nitrile, and latex gloves. (The increases in ocean freight rates are mitigating the full benefits of manufacturing cost reductions.)
  • Many importers are overstocked and offloading gloves below cost, putting further downward pressure on prices.
    • Buyers need to be vigilant about “deals,” as there are unknown brands and mislabeled gloves in the market – for example, blended PVC gloves being sold as nitrile.

What this means for customers:

  • Allow for additional lead times when ordering from your suppliers.
  • You may need to be flexible with an alternative product if the usual item is delayed.
    • For example, a different sized poly bag or another style of glove.
  • With the exception of any further reductions in vinyl, nitrile, and latex prices, expect significant price increases for other types of gloves (e.g. poly) – as well for bags and aprons – due to increased ocean freight rates.
  • Be cautious about deals for unknown glove brands.

If all of this isn’t tricky enough, what might happen with COVID-19 cases around the world in the coming months is a major wild-card. If there are lockdowns in Asia like we experienced in 2020, there could be major product shortages and spiking prices. Elara continues to monitor and respond to these market conditions, which we expect to persist for the foreseeable future.