With so much going on in the market in the last few months, we want to share some quick updates and insights with our partners. This past year has seen a dramatic increase in the cost of ocean freight, polypropylene, polyethylene, and paper. We hope this information may help arm you with some knowledge as we progress into 2021.
Below are some of the year-over-year increases:
Global-Ocean Freight Rates +210%
Polypropylene Rates (South Asia) +75%
Polyethylene Rates (US) +54%
Ocean freight rates have risen due to…
- Consumer spending shifting away from services such as vacations and eating out to goods purchases requiring ocean freight.
- The lack of international commercial air travel therefore reducing capacity for goods in commercial airliner cargo holds.
- Imbalance of global equipment required to ship goods.
Polyethylene / Polypropylene / Paper have risen due to…
- Consumer spending shifting away from services such as vacations and eating out to goods that require these raw materials.
- Increase in internet purchases that require cardboard boxes.
- Plant outages, planned and unplanned, leading to tighter feedstock supply.
- Restocking of products after a drawdown in inventories during the early part of the Covid-19 pandemic.
Our team is constantly monitoring these price indexes to ensure we are doing everything we can to keep our customers prices from rising to the extent possible. Here are some of the measures we’re taking to assist our customers:
- Obtaining multiple quotes to ensure we are receiving competitive pricing
- Locking in contract rates that are below spot market rates when possible
- Making strategic inventory buys when we feel prices may rise
- Helping suppliers find raw materials at better than market rates
- Finding alternative suppliers from different geographic locations that may have access to lower priced raw materials
- Additionally, Global-Pak’s size helps us obtain volume discounts
At the current time, it seems that polypropylene and ocean freight rates have started to level-out, which would provide some much-needed relief. In the meantime, the Global-Pak team will continue to do everything we can to provide quality products at the best possible prices. Please reach out to us directly with any questions and we can assist.