Product-to-Market Pathway
Q1 2022 Market Update
SUMMARY: High energy costs are keeping prices high at both ends of the product-to-market pathway. Raw material substrates that require a lot of energy to produce are thus more expensive, as is the price to get those products to market. In between, shortages of labor, warehouse space and new fleet assets are sustaining factors keeping the supply chain crisis at the top of the list of global business concerns heading into 2022.
Severity Scale
Low
Moderate
High
Factory-to-Port Outbound Logistics
Ocean Transport Inbound to North America
DC-to-Customer Outbound Logistics
Raw Materials
Manufacturing
Diesel fuel prices were 25 to 30%
High energy prices are increasing costs to manufacture energy-intense products such as Chinese bagasse, paper and paperboard, and resin-based. Nitrile and natural rubber both crept up in late 2021 and are expected to continue ticking higher in Q1 2022. Vinyl cost spiked in late ‘21 and will remain stable through February ’22.
Already critically low, availability of container space to ship supplies from Asia to North America worsened in late 2021.
Labor shortages are a daunting problem for factories throughout Asia.
Shipping container shortages have contributed to enormous logjams of finished goods needing storage at Chinese ports prior to loading on cargo ships. This has consumed available port-side warehouse space resulting in log-jams of finished goods leading to production cuts, shipping delays and added cost-of- product.
higher across North America at the end of 2021 than at the end of 2020. Crude oil benchmark West Texas Intermediate price has increased $10 / barrel since 01/01/2022.
China continues to manipulate the power grid to favor certain manufacturing types and regions. Zero-tolerance policies in China and Vietnam have resulted in full-province lockdowns idling factories and slowing port operations after Covid outbreaks and the ensuing recovery and catch-up periods.
Shipping industry experts predict rates for ocean freight will remain high as spot rates near $20,000 per container are normalized as contract rates in 2022.
Semi-conductor shortages have
curtailed production of long-haul tractors and are constraining the North American trucking industry’s ability to expand to
Fines and increased operating hours has helped lower the number of vessels in port at LA / Long Beach; but the number of boats idling off-shore has increased.
expand to meet increased freight demand.
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