By now, you have realized the negative impacts you have had on your chemical supply pricing. Over the past 18-24 months, we have seen unprecedented changes in market conditions. And, we continue to experience rising inflationary pricing caused by global supply chain disruptions related to transportation costs, labor shortages, and raw material availability. Many adverse conditions have all factored into what has shaped up today as perhaps the worst economic conditions the USA has faced in a very long time.
Severe Weather conditions across the Louisiana and Texas regions started the downward spiral of today’s economic woes. Deep freezing in the gulf region back in 2019 knocked out many of the country’s major chemical manufacturing facilities for a long period. Some of which are still not back to 100% capacity to this day.
COVID also factored into this by reducing the work forces and shutting down facilities due to outbreaks. COVID was also responsible for a large portion of the bulk chemical truck drivers to take a leave of absence or retire from their jobs leaving this already declining job market with not enough qualified drivers to meet the demand.
Transportation costs associated with overseas shipping container costs have risen from $2,000-3,000 per container a year ago to over $25,000 today. In addition, the labor shortages to load and unload containers, both abroad and stateside, have caused delays that were once 6-8 weeks have now been extended to over 12-16 weeks and beyond. On top of that, there has been a severe decrease in the number of truck drivers to pick up and deliver products. Many have retired out of the workforce and there is a minimal influx of new younger people wanting to be a driver.
Chemical Costs and availability has seen the greatest increases and longest lead times in decades. Having been in the chemical business for over 150+ years, we have NEVER seen such drastic increases nor the number of increases in such a short period. Possibly the most drastic changes of all times. For the most part, on the average, we have realized 4-5 price increases on many different products in 2021 alone. Additionally, it does not appear to be letting up anytime soon. Many manufacturers have already implemented increases or surcharges in first quarter 2022. Lead times and availability, depending on the product and point of origin, can be quite long and exact delivery dates are impossible to predict. Especially with overseas shipments.
Container Costs have also continued to rise. Resin costs to make pails, drums, and totes have also seen drastic increases. A pail used to cost around $7-9. It is now double that if not higher. Same for drums. One-way totes have seen increases due to the steel cages and the polyethylene bottles. Lead times again are at a minimum of 90 days on shipments.
Asian Supply Chain saw a major disruption in continued supply stemming from last fall into 2022. China reduced output of many raw materials and finished goods due to the Olympics starting with a 50% reduction in the fall of 2021 and a 100% reduction in December and early 2022. In fact, China is continuing to disrupt the supply of all phosphates with curtailing all exports until the end of June 2022. This has put a large dent in the supply not only for the farmers as they begin their planting season but also for the supply that makes up the corrosion inhibitor market here in the USA. In addition, with the tightening of the lead and copper regulations, the full impact may not yet have been realized.
Eastern Europe has added a whole other level to the global impact on chemical costs and supply. The sanctions imposed on Russia by many nations have added to the already high cost of petroleum/natural gas which is the backbone for many of the chemicals used in today’s water and wastewater treatment processes if not the energy to run the manufacturing facilities. In addition, Russia is a major exporter of metals including iron and aluminum as well as many of the exotics. This has affected the inorganic markets heavily as well. We have yet to realize the full impact this will have on global supply at present and in the long-run.
Coyne Chemical values our business relationships and we assure you Coyne Environmental is continuing to implement initiatives to minimize the impact of these increases and product shortages. We ask that you consider your product inventory levels and allow for additional time for deliveries.
Please feel free to contact our offices or your Chemical Application Specialist with any questions or concerns.
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