Below is a snapshot of the most important trends affecting supply chain, pricing and the PPE industry.
Supply Chain & Lead Times
Port congestion remains problematic as the surge in imports continues. Los Angeles and Long Beach have at times seen more than 100 ships waiting to dock and unload their cargo. Lead times on the water have drastically increased from their pre-pandemic averages of 3-4 weeks to a current average of 8 weeks. Experts are calculating this backlog to continue for most of 2022.
The Russia/Ukraine war is wreaking havoc on global shipping. Ocean carriers suspended new bookings to and from Russia, Russian forces are shutting off shipping routes, and air freight is highly disrupted as airspace over Russia and Ukraine are shut down. These developments are resulting in port pile-ups. Combined with ongoing pandemic-related delays and closures, non-stop demand and lack of capacity, ocean freight rates remain high and volatile.
Raw Material Increases
Latex costs have increased 20% since January. We continue to try our best to mitigate price increases to our customers, however, we took increases from our suppliers last month.
Oil now sits at $100 per barrel, slightly lower than its apex of $124 per barrel earlier this month. Rising oil costs have long reaching implications. As prices climb, increased costs will impact not only the shipping and logistics industries but will also trickle down to the raw material costs of plastics, PVC and nitrile.
Tariffs
Section 301 tariff exclusions are set to expire on May 31st, 2022. We are continuing to monitor the situation and will communicate any pertinent information as needed.
China Lockdowns
Due to a recent COVID-19 outbreak, China is experiencing shutdowns in areas of high spread. These lockdowns are typically not long in duration, and re-openings occur on a case-by-case basis once the outbreak in that specific region is contained. This is having an effect on lead times as production, goods and containers are delayed due to the shutdowns.
Malaysia
Market social compliance and labor shortages are the two most concerning crises within Malaysian manufacturing. Since it was brought to the world’s attention in 2019, Withhold Release Orders (WROs) continue to make their way through Malaysian suppliers. Manufacturers are evaluated and removed from the WRO hold list once necessary improvements are made involving the treatment of foreign workers. There are currently four Malaysian disposable glove suppliers on the WRO list. Vanguard takes pride in the fact that we do not work with any suppliers on this list.
How Is Vanguard Safety Working Through These Challenges?
Vanguard Safety constantly monitors the ever-changing supply industry and mitigates the impact to our customers by:
- Increasing Safety Stock – We have adjusted our forecasting and planning to carry more safety stock, ensuring we can continue to be a reliable partner for our customers.
- New Distribution Centers – We are excited to announce that in June we will be opening a new Vanguard Safety DC in New Jersey! Located at 45 Saw Mill Pond Road in Edison, NJ, this new DC will increase our stock levels and service our customers faster. We are also working on adding two more DCs this year, stay tuned for more information.
- Forecasting – We are planning ahead and working off of forecasts provided by our customers to ensure that we are able to consistently supply high quality PPE. We are 100% committed to providing support to our partners.
- Continued Growth – Vanguard Safety is growing fast! We continue to invest in our growing team to support you. Our company head count has doubled in the past four months, and we continue to hire integrally important people to our roster to better serve our customers.