Upcoming Challenges in the Adhesive Industry
The skyrocketing costs of sea shipping in the past 16 months devastated the supply chain in every industry. The availability of raw materials is certainly the main concern due to Logistics, which is also extremely important and directly connected to raw materials costs. Since the start of the pandemic, freight capacity and freight rates have become an issue. Shipping has become very expensive, but even more, it has become very unpredictable. The effects of port and airport closures due to COVID cases should not be underestimated.
However, the price and on-time rate seem optimistic in the short future as the congestion of seaports is released and the efforts of sea shipping companies.
2. Hiking costs
Synthetic adhesives are kinds of products of crude oil of which the price increased a lot in 18 months and the ongoing Ukraine war also promote the shortage of raw materials. Almost all resins, polyols, monomers, and organic solvents are hugely fluctuating; the question now is what product is not influenced yet. The scheduled maintenance in the second half year may make the price tie for several months.
3. Proper inventory
During the pandemic of COVID-19, we all find that proper inventory can ease the pressure on the supply chain and hiking costs. However, the outlook for the second half of 2022 for adhesive industry seems uncertain and makes it a hard decision to balance production and inventory.
Although the challenges in the adhesive industry cause issues in supply chains, complete communication among suppliers and buyers are the best way to pass havoc before the new supply chain is stable. We can expect that supply chains will be reformed in the coming years and mega ports will decrease as distributed industry clusters become popular.