A report accompanying the survey points out that inventories in the chemical industry have increased, but have yet to reach pre-pandemic levels as the industry grapples with supply chain issues. supply and production disruptions.
“I think there is a catching-up period going on right now where things could improve a bit,” NACD President and CEO Eric Byer said on Monday. “But I still maintain that the demand is very, very strong. And until the logistics, the logistics of the supply chain… are fixed, it won’t improve anytime soon.”
Chemical companies struggling with stockouts
% of respondents who said they were faced with stockouts on imported products
NACD’s survey is just the latest data point to highlight the impact that current supply chain congestion can have on a company’s inventory and internal operations. Companies are struggling to replenish their stocks as high demand for their products is hampered by a slower supply chain.
Not only have the shortages worsened since March, but so have the delays. The survey found that 82% of those surveyed face an average increase in travel time for their shipment of 11 days or more.
And the problems extend across the entire supply chain. West Coast ports are still struggling with delays: Ships wait longer to enter, and once they have a mooring point, there is a shortage of dally drivers which exacerbates congestion, a declared Byer.
“A good example of a product will be something like citric acid,” he said. “Citric acid is in Gatorades, or vitamin waters, or Coke or Pepsi or whatever.”
If the ingredient shortage is critical enough, cargo owners take expensive steps to make sure they have inventory and don’t run out of sales.
“And I can tell you Coke and Pepsi buy citric acid from Asia and bring it in big cargo planes because they just can’t get it on container ships fast enough. “said Byer.
The chemical industry is not alone here. Delivery times hit an all-time high in June and appear to be getting longer, according to the latest findings from the Institute for Supply Management’s manufacturing report.
The problems were exacerbated for the chemical industry, especially with the winter storm that hit Texas in February, taking a substantial amount of production offline for weeks on end, Byer said.
Chemical companies expect the effects of the storm to last into the second half of the year.
“Going into the second half of the year, we continue to see strong demand coupled with limited inventory levels as the industry manages customer backlog and supply pressures due to ‘impact of winter storm Uri’, Jim Fitterling, CEO of Dow. said at an analysts conference last month.
Byer said the industry is expected to see production continue to rise, assuming a tropical storm or hurricane doesn’t further affect operations in Texas. But there could be difficult months before supply no longer meets demand.
“Everyone I’ve spoken to tells me we’re looking at at least 12 more months,” Byer said of supply chain congestion.
This story first appeared in our weekly newsletter, Supply Chain Dive: Operations. Register here.