Supply Chain Impact

WHAT WE’RE SEEING

PACKAGING MARKET, cont. Packaging & Shipping

As the pandemic continues to affect the industry, a big change that has come about is the increased dependence on shipping. Rising shipping expenses have remained stubbornly in place for many businesses, making it difficult to manage finances efficiently. Businesses have been left with few choices as they deal with high shipping costs and contracts, in turn leading businesses to pass this expense on to the customer. Unfortunately this is not only true for their products, but their custom packaging too. The price for containers moving goods from China to the US and Europe has remained at a record high and is projected to increase over the coming years. As businesses continue to enter into contracts with higher than usual rates, it’s becoming apparent that higher freight costs may be here to stay. PROMOTIONAL MARKET State of the Market Promo supply chain challenges continue, which emphasize setting and meeting expectations through the end of the year. Rising prices are certainly an issue, but product shortages have been the greater concern. Domestic inventories are being depleted at record rates as suppliers are kept waiting for replenishment shipments to arrive, as international and domestic transport delays are not expected to improve until mid-year 2022. Higher prices on products, longer times for order production, eroding customer service levels, delays in delivery of finished orders and other headaches are some of the problems stemming from the pandemic. Many promo distributors are losing orders as buyers seek alternative solutions. Apparel decorators are dealing with ink shortages and rationing. Some of the raw materials typically used in the manufacture of both plastisol and water-based inks have been greatly constrained. Embroidery products are more readily available, but it can take longer than usual to get them. Labor Shortages Hiring difficulties continue, both for positions vacated due to layoffs at the start of the pandemic and for new positions necessary to meet surging demand. These issues are contributing to slower production times for suppliers already navigating supply chain disruptions and causing problems for distributors looking to regain their footing as the Reports of vendor qualification protocols being stretched, and products with less than rigorous testing regimens have found their way to end-users’ customers, as some distributors are found to be cutting corners on compliance and safety. Price Increases Price increases are expected to continue throughout 2021 as transportation and many raw material costs continue to rise. Product price in nearly every promotional product category has been impacted as pressures come amid exorbitant freight expenses, rising labor costs, and the declining value of the dollar against the yuan of China. Shipping surcharges may be coming. Proactive suppliers are trying to forge a path through importing, inventory and labor issues to keep business moving for the promo industry. economy rebounds. Compliance & Safety

taylor.com