511 - Market Update Q4 2021

Product-to-Market Pathway SUMMARY: Raw material cost inflation continues to rise though at a slower pace for many commodities than those we witnessed earlier in the year. However, shipping expense, on land and at sea, continues to drive up the cost of moving products to market around the globe.

Q4 2021 Market Update

Severity Scale

Low

Moderate

High

Factory-to-Port Outbound Logistics

Ocean Transport Inbound to North America

DC-to-Customer Outbound Logistics

Raw Materials

Manufacturing

Record North American demand driving Aluminum cost to 10-year highs

Hurricane Ida’s landfall in late August had significantly reduced North American rail and intermodal operations, across the continent Driver shortages continue to reduce available truck capacity, driving 3 rd Quarter freight rates up nearly 30% since the start of the year

Covid outbreaks have plagued production in China, Malaysia and Vietnam throughout the summer and into fall

North American retailers are scrambling to build inventories ahead of the Holiday rush, further straining cargo capacity

Recovery continues from Covid disruptions at Chinese port complexes in Ningbo and Yantian that occurred during the summer

Unstable consumer demand has increased cost of paper production, especially for specialty products

Chinese government shutdowns of power grids for infrastructure renovation and hydro-electric conservation are disrupting and limiting production capacity

Estimated effect of which outpaced supply chain impact from the Suez Canal blockage in March

Shipping container cargo fees now routinely exceed $20,000, a level five times higher than this time last year

PVC-based product costs increasing sharply in Q4

Cost of raw materials used to manufacture takeout meal packaging and associated products, including aluminum, thermal papers, bagasse and plastics have continued to rise throughout 2021, as increasing consumer demand has put pressure on material availability.

Material Cost Rate of Change since January ‘21

Raw Material

Affected Product Lines

PVC

Vinyl Gloves, aprons and other apparel

30-35%, up 20% since July

Aluminum

Foil sheets, lids, wraps

40+%

Register Rolls, Thermal and Bond Paper, Placemats, Paper Takeout Products, Napkins, Crayons, Filter Papers

Bleached Paper

5 - 35%

Bagasse Fiber

Eco-friendly Takeout packaging and Cutlery

20%

2

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