Second of two parts.
Last week, we examined the current state of the disposable glove market, relative to the continuing COVID-19 crisis and obstacles manufacturers face in Southeast Asia. This week, we look at a problem that has been with us for months and continues to wreak havoc across numerous industries—the global supply chain.
After years of optimizing their supply chains and building around just-in-time inventory across all industries, companies are struggling to keep their products moving around the world at the same pace. As a result, the world is running low on everything.
Companies are furiously trying to replenish their warehouses, causing a buying frenzy that is leaving supply chains sputtering. Transportation backups, product shortages, and price spikes are nearing the highest levels in recent memory.
Dependable data is hard to come by
Companies are having a hard time accurately forecasting demand. Data from the last 18 months is not particularly useful—you can’t plan for the rest of 2021 based on what happened last summer. The reality is that most companies have to remain in reactive mode for the time being.
All aspects of disposable glove production and procurement are impacted. While prices may be softening, the cost of nitrile butadiene rubber, the primary ingredient used in the world’s most popular disposable gloves, has nearly doubled in the past 18 months, and the PVC resin used to make vinyl gloves is also more expensive.
Shipping containers, currently in short supply, have risen in cost by several times in some cases. Container vessels are running at capacity, clogging up ports and creating a trickle-down effect that resonates throughout the U.S. transportation system. Disruptions at a key export hub in China have further impacted global shipping and led to soaring ocean freight rates.
A long way to go before return to ‘normal’
The only thing more disturbing than the sheer magnitude of the supply chain problem is the fear that it will extend into 2022, which appears likely.
While glove prices have in some cases declined off their peaks, it is unrealistic to expect a return to 2019 pricing any time soon.
The disposable glove market remains dynamic with limited availability of thicker nitrile and latex gloves, which prevents significant price reductions on those products. Nitrile prices will remain elevated throughout the end of the year, and likely beyond, as supply continues to struggle.
Regardless of capacity shortages, demand for gloves is projected to maintain double-digit growth between 12% and 15%, which could prolong the current gap between supply and demand into 2023.
Allocations are a thing of the past
Over the last 15 months, market conditions brought on by the pandemic forced AMMEX to allocate product to customers. However, adapting to the dynamic market, we have as of June 2021 ended this practice. All inventory will be available to all distributor partners on a first-come, first-served basis.
We highly recommend using our online portal, where you will be able to see which products are currently “in stock” and which are on backorder and listed as “temporarily out of stock.”
There remains a lot of uncertainty about the disposable glove market, both in 2021 and beyond. We expect the market conditions to slowly normalize—but that may take many months. If the last 18 months have taught us anything, it is to expect the unexpected.