Market update: the Aftermath of Suez

While the Suez Canal has been cleared and the Ever Given is back afloat, we’ll probably feel the effects of the blockade for months to come. We answer some of your questions about the aftermath below. Is your question not included? Please contact us.

- What can we expect in the coming weeks?

Expect extra delays. The various harbours will have to handle the sudden wave of ships that all want to unload at once, and will prioritise livestock and perishable goods over inanimate materials. This will lead to longer offshore waiting times. As shippers are pragmatic and time is money, they will reroute to different harbours to unload materials there first and then return, which may take weeks.

In the meantime, source materials that were ready for shipment are still in storages all over Asia, waiting for the ships to return. It will take months before the effects of the Suez are fully reduced.

- Current delivery times from Asia are problematic for my business. What if I need the goods faster?

Willems has suppliers in Europe and Asia. Our clients have the option to choose for quicker delivery over land but higher production costs, or lower production costs but longer shipping times. To suppress additional costs when choosing a European supplier, some clients have opted for less elaborate prints, or used alternative materials.
Our advisors are happy to think along and offer you fitting custom advice.

- What’s going on with industry prices?

We have seen steep price rises in two instances. The first is in resources, such as plastics, iron, copper, woods, and cotton. This affects not just the packaging industry, but any industry that relies on them. The second spike is in shipping containers from Asia, where prices have skyrocketed to almost 400% their usual price. The Suez delay may cause an additional doubling of these costs. Chinese source material prices may rise even further, and take a lot longer to be delivered. Luckily, Willems Packaging has alternative production facilities in Europe, and is happy to think along in deciding on your best way forward.

- What causes the current material scarcity?

Over the last few months, materials have become scarce, which has driven up prices. Sometimes as much as 30 to 60%.
The reason for this material scarcity isn’t really clear yet. One possible explanation may be the pandemic: local lockdowns and social distancing regulations may have made sourcing and processing the materials more difficult. It would at least make it harder for suppliers to achieve their regular output levels, and that what they do manage to produce will go to the highest bidder.

Another explanation may be that demand may have increased beyond supply capacity. Lockdowns have caused people to spend more time at home. As they cannot spend their money on travel or other luxury investments, we’ve seen an increase in home redecorations, including beds and bedding materials. This puts an extra strain on resource suppliers, who are bound by the same lockdown restrictions. This problem of material scarcity should resolve itself once the pandemic is under control. Until then, we will have to be patient.

Fitting flexibility with custom solutions

We hope this update answers questions and concerns you might have about your packaging solutions.

 Be sure to contact us if you need a custom packaging solution for your business in these times. Regardless of the pandemic or other Suez-like situations to come, we offer you maximum flexibility with our extensive network of suppliers in Europe and Asia. Having an experienced supplier who knows the way may be more critical for your business logistics than ever before.