Tagged "manufacturing"
Expected communication delays for Dragon Boat Festival, June 12-14
Manufacturers in China are preparing for the annual Dragon Boat Festival, which will last from June 12th to June 14th. Communications may be delayed until they return to work on June 15th.
Although not as long as the Lunar New Year celebration, the Dragon Boat Festival is a widespread holiday in nearly all of Asia. Plan on minor disruptions to production and slower responses from factories, freight forwarders, customs brokers and anyone else directly connected to the region.
The Dragon Boat Festival has been celebrated for thousands of years and its traditions are associated with driving off evil spirits, disease, and bad luck.
Tape and adhesive prices continue to rise
Customers may see continued price increases across packaging going into holiday peak season, particularly tape and adhesives. Both the COVID-related ecommerce spike and constricted supply chains have driven up the price of all major feedstock and ancillary components. These factors have put tape producers in a position to dramatically raise prices.
One cause of the constricted supply chain is extreme weather, including February's polar vortex in Texas and Louisiana. This continues to drive up freight costs and disrupt the petrochemical supply chain, straining the supply of several raw material components used in tape.
Year over year, there have been significant price increases on raw material and ancillary cost components as the result of a number of compounded factors.
Raw material costs (Jun 2020 - May 2021)
Other costs (Jun 2020 - May 2021)
We recommend that customers place orders as soon as possible as we expect this trend to continue throughout summer and fall.
Extreme delays ahead for US imports
Trans-Pacific freight delays and extreme port congestion are continuing to delay imports, and may worsen in the coming months as import volumes continue to grow. We will also see fallout from the Suez Canal accident, as resulting congestion at European ports will limit the number of empty containers transported back to Asia. This in turn will reduce the number of available containers available for China to US shipments. Importers should also prepare for higher spot prices as the gap between supply and demand widens.
Lumi recommends placing orders as far in advance as possible and to consider budgeting for air freight in mission-critical cases.
Adhesive shortage impacting some lead times
An adhesive shortage is occurring nationally due to the historic winter storms last month in Texas and across the Gulf Coast region. Adhesives are an important component in numerous packaging products including tape, folding cartons, and corrugated containers. Key raw materials and intermediates used to manufacture adhesives are byproducts of the petrochemical industry, which was hit hard by forced operational shut-downs due to the cold weather. The storms exacerbated existing issues in the adhesives supply chain, including already low inventories due to increased ecommerce demand, and limited availability of freight capacities.
While most petrochemical operations have restarted, US American Adhesive and Sealant Council (ASC) indicated US supply chains will take weeks or even months to recover after such a major disruption.
We are monitoring the situation and will contact those directly affected by the shortage. We advise placing all orders as soon as possible to help mitigate any delays.
Price increase for corrugated products in North America
Several major North American producers of containerboard have recently increased linerboard prices by $50-$70/ton. Though not universal, this recent round of increases is already being adopted by several integrated and independent corrugated manufacturers.
Learn more about corrugate price changes using the Lumi Corrugated Tracker.
While corrugated increases are expected a couple times a year, this situation is slightly abnormal because the increase is being driven by tight supply and sustained increase in demand, which has not let up despite the holiday season coming to an end. These issues are compounded by the rise in input costs and unpredictable shortages in labor due to COVID-19.
Please reach out to your Customer Success Manager to understand how the price increase impacts your products.
Expected production delays for Lunar New Year
Factories in Asia will be closed February 10-20 in observance of Lunar New Year (February 12). Some factories allow workers to take more than the allotted time off, so we like to plan for reduced production runs for the remainder of the month.
Before and after the weeks-long holiday, factories will experience congestion as they prepare for the close, and then catch up on the backlog. This will result in longer than expected lead times in early March, but production will level out in mid to late March. Please note, the delays in production also have an effect on logistics and congestion at port. All cargo should be planned in advance. Bookings within the Lumi freight team will begin March 15 and proceed as normal following that start date.
To avoid production delays, if you are ordering from factories in Asia and need to receive items before the end of March, we advise placing your orders as soon as possible.
Preempting production delays for Lunar New Year
Factories in Asia will be closed for weeks in early February in observance of Lunar New Year (February 12). Orders placed after December 31, 2020 will likely encounter serious production delays.
Before and after the weeks-long holiday, factories will experience congestion as they prepare for the close, and then catch up on the backlog.
To avoid production delays, if you are ordering from factories in Asia and need to receive items before the end of March, we advise placing your orders as soon as possible.
Price increase for corrugated products in North America
This month, containerboard prices have increased by an average of $50/ton. The major North American producers of containerboard cite strong demand for corrugated products and the rising cost of transportation, energy and insurance as reasons for the increase.
Learn more about corrugate price changes using the Lumi Corrugated Tracker.
Containerboard is the largest material component of corrugated products. As a result corrugated manufacturers across North America have increased prices. Price increases vary by manufacturer, but range between 6 to 10%. For some manufacturers the increase is effective immediately, for others it will take up to 90 days.
Please reach out to your Customer Success Manager to understand how the price increase impacts your products.
U.S. International Trade Commission decides no on further duties for Chinese glass products
The U.S. International Trade Commission found on October 20, 2020 that no U.S. industry is materially injured by imports of glass containers from China. This is counter to what was determined in September by the U.S. Department of Commerce, however, both organizations must agree that imports are injuring the domestic industry in order for duties to go into effect.
As a result of the Commission’s negative determination, no further anti dumping duty will be applied or countervailing duty deposits required for imports of glass containers from China, and importers will receive refunds of the deposits that they have previously paid.
Potential anti-dumping duty for Chinese glass products
A new anti-dumping duty (ADD) is being considered for most glass items brought into the US from China. The items covered under the proposed ADD are glass bottles and jars that hold from 2 fluid ounces up to 1 gallon.
The tariff would vary across industries and some manufacturers will be granted reduced rates, however the vast majority of factories affected would be subject to a rate of up to 256%.
In September 2019 a petition was filed by The American Glass Packaging Coalition claiming that manufacturers in China are receiving subsidies from the Chinese government.
On September 14, 2020, the U.S. Department of Commerce (DOC) made its final determination in favor of the new ADD, however in order for tariffs to be imposed, both the DOC and the U.S. International Trade Commission (ITC) must agree that imports of glass containers from China are injuring the domestic industry.
The ITC is currently scheduled to make its final determination in the anti-dumping duties investigation by October 26, 2020. If decided in favor of the new ADD, an anti-dumping order will be issued by November 2, 2020.
The ITC has not provided any indication of how they will rule in this determination, however on June 9, 2020, in a countervailing investigation, the ITC decided against a new ADD.
