The global manufacturing, logistics and supply chain industries have had a challenging 18 months, to say the least. Now, another highly disruptive shortage is causing global manufacturing issues. Faced by raw material constraints in combination with surging demand, the plastics industry is struggling to keep up – particularly supplies of polyethylene (PE), polypropylene (PP), and monoethylene (MEG).
As would be expected, this shortage is pushing up prices and having significant secondary and tertiary effects on a whole host of products. With so many goods relying on these materials, many manufacturers have been forced to scale back, delay or shut down production. But how widespread is the impact? Well, these plastics are used in everything from smartphones and appliances to car parts, roller skates and food packaging.
The increasing connectivity of our world resulted in widespread fallout from the semiconductor shortage, with it affecting many more sectors than would be immediately obvious. In much the same way, this plastics shortage is far-reaching. Between COVID-19, Hurricane Laura, winter storms and “force majeures” declarations, a lack of awareness has resulted in supply havoc in the US. Often abundant and low-cost, the shortage of these plastics has taken many companies by surprise.
Demand within the world’s three largest plastic markets, the US, Europe and Asia, has remained high throughout 2020 and 2021 with the pandemic playing a big role. Remote working and schooling have increased demand for electronics, while healthcare and food packaging requirements have also spiked. The steady resurgence of the automotive industry has also contributed to this period of increased plastic demand.
At the same time, logistics have been extensively disrupted. From driver shortages, border issues, reduced total supply chain capacity, container shortages and ocean freight issues, we have seen – and continue to see – a whole range of issues. The result? Plastics have seen significant price inflation and unusually long lead times.
At the beginning of last month, up to 60% of manufacturers were reporting resin shortages, with issues predicted to persist for up to three years until production catches up with demand. In the US, prices of many raw polymer materials are at record highs, with the ABS plastic used by automakers up 35% in just six months.
It is always advised that manufacturers monitor not just their direct suppliers, but right the way up their supply chain to the raw material producers. Such detailed tracking provides comprehensive oversight, highlighting issues long before they reach the factory floor.
As we continue to see supply chain issues, unpredictable weather and geopolitical instability – all during a global pandemic – it is essential to have an emergency logistics provider that understands your organisation. By proactively developing contingency plans and drawing from a global network of logistics professionals, Evolution Time Critical leverages its experience and expertise to keep you moving, even in a crisis.
For more information on how Evolution Time Critical can help you prepare for the unpredictable, get in touch with our team today.