We’re Weathering The Perfect Storm

April 30th, 2021 . Company News

Let’s be honest, the Global Supply Chain is a challenging nightmare. If it’s not an issue with the pandemic, its container and labor shortages, weather, consumer market shifts, traffic jams in the Suez Canal or factory fires. Honestly, you can’t make this stuff up!

These catastrophes have created a serious supply disruption in the plastics industry. Extremely limited raw materials, in particular polypropylene (PP), polyethlene (PE), and monothylene (MEG) have resulted in sharp price increases and production delays for plastic injection molding companies around the world. No company is spared this headache.

Because plastics are used in almost every area of life – from packaging, appliances, transportation and communication to just mention a few – the demand from consumers have certainly added to this pressure.

This shortage has been building. Last summer, Covid-19 created inventory level to plummet due to factory lockdowns. Hurricane Laura only added to this problem in August when a number of petrochemical factories in Louisiana and Texas shut down. Within a blink of an eye, 10% to 15% of U.S. PE and PP production immediately stopped.

As manufacturers held their breath, along came a long list of force majeures from large polymer producers in Louisiana and Texas. This allowed suppliers to be relieved of certain supply-delivery commitments due to circumstances outside their control. And through it all, Covid-19 precautions continued to slow production at many production facilities resulting in labor and trucking shortage at ports.

Of course, we can’t forget that Gulf Coast winter storm in February that his Texas – home to the world’s largest petrochemical complex. We are told it will take at least six months to correct issues caused by that storm.

Oh yes, we can’t forget what just happened a few weeks ago, the grounding of a container ship in the Suez Canal. Great timing! Right?

Unfortunately, we anticipate worsening supply-demand issues as the U.S. begins to awake from its pandemic sleep. Plaspros, like all other companies, is challenged with inventory issues and increased supply rates. This has impacted lead times for orders. It looks like manufacturers will be fighting this battle for last least 12 months. Yet, there is hope.

We have all learned a lot from this adventure. Vulnerabilities carefully hidden in the supply chains emerged. We have also begun to develop strategies for supply-chain resilience. And because Plaspros has strong monitoring and supplier management system, we have a better idea of how this crisis impacts our supply chains. This has helped us better communicate with our customers.

And through it all, a very clear silver lining has emerged. Our customer service is solid! Plaspros has and continues to abide by the highest level of quality and communication. And no perfect storm will ever impact this!