“Sorry, that item is back-ordered…”, “There will be a delay in shipping...”, “Prices are increasing...”, You have probably heard a few of these statements when making purchases. Many businesses are experiencing delays, shortages and price increases in the wake of the pandemic. The water treatment industry is feeling the effects of current supply chain challenges, as well. Many forces have come together to cause this disruption, we are going to look at a few of the major factors and some industry-specific challenges we are experiencing right now.
Global Shipping Challenges
At the beginning of the pandemic maritime shipping all but came to a standstill. The containers from these ships faced inefficiencies in being processed and unloaded. Warehouses, trains, trucks and other players that are a part of the shipping process were also facing inefficiencies brought on by the pandemic. All of this has resulted in a much longer timeline and a shortage of containers, as many are often sitting on ships waiting to be processed. To put things in perspective, below are a few pre- and post-pandemic shipping stats:
- Ocean freight costs are rising with no end in sight. As of 6/22/21 the cost of a container to ship from China to Long Beach is now $12,000.00 compared to $ 2,250 pre pandemic. The cost of a container to ship from China to Houston is now $18,000.00 compared to $ 2,250 pre pandemic.
- Longer lead times for deliveries are causing product shortages. What used to take 6 weeks to arrive in the U.S. is now taking 3 months or more.
- Ports are still operating at less than full capacity. Many are operating on a 4 hour on then 4 hours of cleaning for every shift. This means that the ports are basically operating at half capacity.
When Lean is Not a Good Thing
Another factor that has caused delays in production is the concept of lean manufacturing or just-in-time manufacturing (JIT), an operating model that was started by Toyota in the 1930’s. Companies employ this strategy as a way to work more efficiently with less overhead. This concept works great when all suppliers are operating at full capacity. However, when there is any disruption, such as a fire, natural disaster or a global health pandemic, then it stagnates production as businesses can’t easily access supplies to keep up with current demands, and they have no excess inventory on hand to offset the disruption.
- JIT manufacturing has reduced inventories. When the pandemic hit, this model failed. When the economy opened up and demand sky-rocketed, the lack of inventory left many companies unable to fill orders.
- Chemical feed and control equipment have been affected by JIT manufacturing, as well as rising delivery costs. Lead times on most equipment items are double what they were in the past.
What factors are causing price increases?
Shipping delays, product and labor shortages, additional taxes and other factors have lead to increased pricing. These factors have had an impact on several products and raw materials:
- The rising cost of steel and plastic has resulted in increased pricing on drum and pail costs.
- Cost of closed loop products, cooling water scale and corrosion inhibitors and waste treatment chemicals is increasing due to the following:
- Azoles, (yellow metal corrosion inhibitors) are now subject to an anti-dumping tax as a result of a lawsuit filed by U.S. manufacturers against China. This has resulted in azole prices increasing 6 times. With only one US manufacturer of these products, this likely is not going away any time soon.
- The February freeze in TX created a monomer shortage. Monomers are a raw material used to make the polymers that go into boiler/cooling products as well as waste treatment chemicals.
- Sulfuric acid is in short supply. There are only a few domestic smelters that make this material. One is on strike and the other is having foundation problems at its production facility. These combined have caused sulfuric acid to come under force majure and as a result increased pricing.
- Domestic freight costs are up due to rising fuel costs and driver shortages. Freight companies in some cases are not even showing up on the date that was promised to pick up leading to longer lead times.
How to adapt?
Many factors have created these delays and shortages which will be with us for the unforeseeable future. Although some variables are beyond our control, there are tools and technologies that can help improve efficiency and reduce water and chemical usage. Automation packages, remote monitoring capabilities, and reporting tools such as WTeService help achieve optimal system performance – resulting in significant savings. Having a better understanding of how and when to respond to a system alarm also reduces some manual tasks, resulting in labor savings – another variable that has been a factor following the pandemic.
If you have questions about how to optimize your system or achieve better visibility, request a site survey. Please click the link below to fill out the form and one of our Technical Engineers will be in touch.
President, Watertech of America, Inc.
Joseph Russell is the President and owner of Watertech of America, Inc. He graduated from The University of Wisconsin- Milwaukee in 1990 with a Bachelor of Science degree in Mechanical Engineering. He currently serves on the Professional Advisory Board for the University of Wisconsin- Milwaukee’s School of Freshwater Science.