Myriad issues can influence the cost and availability of disposable gloves. These factors were of course magnified during the pandemic, where unstable prices and abrupt twists and turns of availability drove buyers and sellers alike to take any steps necessary to acquire product.
Regardless of how the market has changed post-pandemic, one thing that remains the same is that most gloves are sourced from across the world, specifically SE Asia and China. This is where the variables begin to stack up, from manufacturing costs to ocean shipping to domestic transport.
While acute supply chain dysfunction has largely been resolved and gloves are generally cheaper with better availability, in all likelihood more choppy waters lie ahead for the market. There are still challenges in achieving superior fill rates due to supply chain and inventory forecasting constraints. Energy costs in SE Asia are still a concern for manufacturers. In the U.S., warehouse and labor costs are on the rise.
Higher prices coming down the road?
Most producers are overstocked, and as a result have to cut capacity. That limits profits, so they cut capacity even more. Eventually profit will return, but this could raise the price of gloves down the road.
Conversely, ocean shipping costs have dropped. While most shipping companies have made significant profits over the last few years, they’ve spent it on expansion, payroll, and returning cash to shareholders. As profit margins decline, they are looking for ways to make the system work again for them.
Transportation in the U.S. has been spotty. United Parcel Service and the Teamsters reached a tentative deal to avoid a costly strike—but at the same time, increased costs for UPS will likely affect the price of most goods. The International Longshore and Warehouse Union and Pacific Maritime Association also forged their own deal after months of labor strife.
End of an era for Yellow trucking
U.S. trucking giant Yellow Corp.’s move after nearly 100 years in operation to declare bankruptcy impacts 30,000 workers; it’s too early to say how much it will affect local and last-mile logistics. (AMMEX and Zoomget will no longer utilize Yellow’s services but have moved all shipments to other carriers.)
Six months from now, distributors may find themselves going back to their clients and saying that the price of gloves has risen. Whether the market course corrects higher or lower, a shakeout will happen.
Some analysts are less optimistic than manufacturers on the growth prospects of the industry this year, as the overcapacity situation is expected to persist at least over the next two years.
Read more about current market conditions in our Q3 Market Update.