How we would love to be writing a blog about all things positive but as time goes on the construction and supply industry are seeing more and more shortages. News broke this week that plastic shortages have hit the shortage list and shortages are expected to run into the early part of 2022.
Worldwide markets for plastics are experiencing significant disruptions, with the US being the hardest hit with the industry ‘unable to supply the current US demand for plastics’. It is clear that the pandemic had a significant effect on the industry over the last 18 months but there are ongoing interactions that have created the current situation.
- Labour
- Inflationary pressure
- Supply and demand disruption
- Logistics (transportation and supply chain management)
As mentioned above there was an initial effect on the plastics market as suppliers reduced stocks due to uncertainties about the effect that COVID would have on the market, but the predicted changes did not go as expected! The industry saw a huge increase in demand for plastic products, driven by the changes in consumer buying behaviour. The increase in building, construction, house renovations and increased demand for white goods, televisions and electronics.
As well as the rising concern around COVID, 2020 saw some of the worst hurricanes experienced in years, including two back-to-back hurricanes that hit Texas and Louisiana within two weeks of each other, this had a profoundly negative effect on hydrocarbon extraction and processing in the Gulf of Mexico and the American Gulf Coast.
Suddenly the logistics industry became overwhelmed by shipping volumes both domestically and internationally – with early Asian recovery from COVID the markets caused an increase in international trade volume.
- Port bottlenecks
- Truck capacity shortages
- Container shortages for Asian exports leading to worldwide container shortages
Demand for plastic supply continues to surge, especially for:
- Food packaging
- Automobile components
- PPE
The storms that hit Texas and Louisiana had a huge impact on chemical processing and plastics manufacturing causing the Texas energy infrastructure to completely collapse – almost crippling refinery and chemical operations.
Loss of oil and natural gas flow for plastic raw material processing
Loss of natural gas and electrical supply to keep plants running
Extreme mechanical damage due to extended periods of unusually low freezing temperatures
Plastic production and the effects of reduced labour forces
As per most industries, COVID reduced chemical and plastic plant productivity because of its effects on staffing. Production schedules were compromised and had to compensate for the sudden unavailability of symptomatic employees and employees going into quarantine.
As oil and gas chemical processing and plastic manufacturing plants are generally large scale, open-air facilities the plant layouts made it fairly easy to keep employees safe and manage social distancing effectively, but, everything needs to be working correctly to ensure these safety levels can be maintained. The situation changes drastically when some repairs and problems need to be resolved – COVID safety measures have a significant impact on the length of time required to get a plant back up and running to full production.
Polymer manufacturing plants must go through these regular, major maintenance shutdowns every three to five years. Many plants delayed their 2020 maintenance shutdowns in the hoe that COVID may have been and gone and things would be back to normal – but as time has passed scheduled shutdowns can no longer be delayed and now every market must cope with delayed plastic production turnarounds that must happen in 2021 – these shutdowns are in addition to the already scheduled maintenance shutdowns.
A normal plastic plant turnaround is approximately 30 days, currently, these plants are running 0n 60day turnarounds.
Logistical issues affecting plastic shortages and supply
It has been a crazy year with many unexpected and unpredictable issues arising for so many, the plastic shortages are also being affected by;
- Congestion at seaports
- Driver shortages
- Reduced trucking capacity
- Reduced availability of port labour (longshoremen)
- The increase in the volume of trade coming from Asia (meaning container supplier is inadequate to meet supply-demand)
- Suez Canal ‘traffic jam’
We will end this article on a positive note by saying that plastic plants are re-starting testing to ensure everything is in good working order, although plants are not back to full production capacity they are making attempts to get plastic supply back on track.
Let us hope the industry starts to see some positive changes on the plastic shortages in the next few months and increased costs start to level out to pre-pandemic prices.
If you have a warehouse storage project in mind and would like to discuss your requirements please get in touch.