International shipping is another cost variable that exerts outsized influence on the price of disposable gloves.
Ocean freight rates in 2023 have been on a steady decline for shipping containers from SE Asia to U.S. West Coast ports. Experts fear transport companies will try to force up prices by making fewer voyages and leaving containers behind, delaying the delivery of goods.
Falling volumes have pushed shipping rates into a downward spiral. For example, the cost of shipping a 40-foot container from China to America’s West Coast is now less than $2,000, down almost 90% from its peak of $20,600 in September 2021, according to Freightos, an online freight marketplace.
Expectations exceeded reality
Shipping companies that made billions in profit in 2022 alone had been using the money to ramp up capacity and buy new vessels. That leaves large shipping operators with a potential capacity glut just as the export boom that propelled rates to all-time highs peters out.
Are these container shipping prices here for the long term? It’s hard to say. West Coast ports ended 2022 with an overall 7.5% decrease in loaded imports and an 8.6% decrease in loaded exports. Some of those decreases were due to the extremely high volumes created by the over-ordering of goods by shippers during the pandemic.
Adding to these decreases were concerns that International Longshore and Warehouse Union (ILWU) negotiations might shut down West Coast ports. Flaring labor tensions have been sparking fears of growing work stoppages that would hobble the flow of goods through some of the country’s biggest trade gateways as importers prepare for the year’s busiest shipping season.
Talks are going nowhere fast
The Wall Street Journal reported that importers are increasingly concerned about a series of targeted labor actions that have disrupted major ports. Contract talks between employers and dockworkers are approaching the one-year mark with little sign of progress. The ports push for more automation, while the unions seek better pay and working conditions. The results of labor negotiations will undoubtedly impact the logistics cost moving forward.
Even with MSC, the world’s largest container line, saying it expects the ocean container market to grow in the second half of 2023—and that the company sees the U.S. economy as “very strong and very positive”—there is too much uncertainty at this time to make any firm predictions.
Overall, while the actual cost of shipping containers is on the way to its pre-pandemic level, the increased cost of labor, collective bargaining-related disruptions, rising interest rates, and the impact of financial market volatility on the largest shipping companies are all expected to continue affecting the disposable glove market.
For the full story, download our Q2 Market Update.