Second in a series
Geopolitical tensions, rising transportation expenses, higher labor costs, and seasonal impacts are all causing more volatility in the disposable glove supply chain.
Global shippers have faced many headaches in moving goods over the last year. At the top of this list is the shipping disruption in the Middle East and the impact on trade movement through the Red Sea. Traffic has plummeted by two-thirds through the key shipping route since attacks on vessels by Houthi rebels sympathetic to Palestinians in the war in Gaza began in late 2023. Before the attacks started, the route accounted for 12% of all global trade.
Major shipping firms like Maersk have all but abandoned the Red Sea route. Instead, they opt to travel around Africa’s Cape of Good Hope, which can add 10 days to journeys and increase costs. Interestingly, the world is not new to this, as many industry observers remember events that closed the Suez Canal from 1967 to 1975, forcing global trade to adjust.
Overall, some analysts are predicting another challenging year for ocean container shipping. In 2025, shippers will have to navigate significant demand, alliances, and capacity shifts as the global supply chain adapts to new economic realities and environmental pressures.
In anticipation of these market shifts, many shippers are already opting for stable, long-term pricing agreements over the volatility of the spot market. Fixing rates over a 12-month period is increasingly seen as a strategic move, as it provides greater budget predictability and insulation from potential rate spikes. While rates on certain lanes may soften as the new vessel capacity is deployed, Drewry expects them to stabilize well above pre-pandemic levels.
As usual in Q1, suppliers will have to account for the impact of the Chinese New Year on global logistics.
Fitch Ratings, a U.S. credit rating and analysis agency, has issued a neutral outlook for the ground freight transportation and logistics (T&L) sector in Canada and the U.S., anticipating a gradual recovery starting in 2025. The sector, which encompasses freight operators such as rail, trucking, freight brokerage, and logistics services, is poised to benefit from an improving freight cycle following a challenging period between mid-2022 and mid-2024.
Download the Q1 Disposable Glove Market Update. Next week: currency fluctuations.