Dear Valued Client 12 November 2021
NEW UNCERTAINTIES AFFECT SHORT TERM SUPPLY OF PPE
Since the last update where we forecasted supply would start to normalize and prices would reduce, they have.
Looking forward, new supply uncertainties warrant a more detailed update and this communique covers what to expect and plan for in the lead up to the festive season, the New Year, Chinese New Year and into the second quarter of 2022.
However we are aware that time is precious, so we have underlined important points, included an outlook as well as what we are doing to assist clients.
Please contact our team or me directly regarding any queries. We welcome the opportunity assisting you and your business
1.1. Supply Chain Delays
Supply remain severely disrupted, however the reasons have changed. COVID-related shortage of supply and excessive demand are no longer the primary causes of sourcing delays. As a consequence of a series of cause and effects, international logistics is now the primary cause of supply delays. Shippingdelays stemmed from the Evergiven Suez Canal blockage and resultant backlogs due to vessel re-routing and global containers and vessel imbalance. This situation has been compounded by landside logistics issues particularly in the USA, Europe and UK which has created a shortage of drivers, full warehouses and containers. This is exacerbated in South Africa by SA Port inefficiencies and N3 disruptions.
The net results are excessive delays of shipments by more than a month at a time.
1.2. Festive Season Demand and Supply
Leading up to the festive season, manufacturers and stockists minimize product on the water and floor stocks before closing down for two to three weeks. Essential End Users normally increase stocks at this time to ensure they are covered but some have not as yet. Businesses that remain open and experience high seasonal demand, like pharmaceutical manufacturers, healthcare and Fast-Food outlets should have ordered already or they run the risk of not having sufficient personal protective disposable wear this year.
1.3 Chinese New Year 2022
From the beginning of February, China and other Eastern Suppliers close down for 2 – 3 weeks. Normallystockists buy ahead of Chinese New Year to ensure supply to end users but this is not happening this year due to shipping delays and cost and price instability heightened supply risks for end users for the first quarter of 2022.
1.4 Market Demand
End Users and Resellers have become more price sensitive and are holding less stock. While this is understandable due to the instability of pricing, lead times and supply in general from the East over the last 18 months, not carrying sufficient stocks of essential protective wear this time around carries a far higher risk than in previous years.
2 Cost Price Deflation
PPE Manufacturers gouged the global markets last year, but producers of raw materials and finished goods have started reducing prices over the course of this year. In contrast shipping costs and oil prices are offsetting some of the gains. What is important to note in the short term is that potential price deflation is forcing stockists to keep stocks low despite the seasonal demand, festive season and Chinese New Year.
While the global roll out of COVID vaccines is improving the supply and demand outlook, further waves are expected and there is always a risk that a more virulent variant with a higher mortality will mutate into existence. These risks will continue to influence demand.
4 What to expect over the next 4 to 5 months
While we expect demand to exceed supply for disposable PPE through the first quarter of 2022. Stockists will not meet demand due to shipping supply issues, seasonal working capital demands and risk aversion. There will be some price reductions for disposable wear leading up to the festive season due to stockists liquidating floor stocks but this will be short lived. Global demand for protective wear will exceed supply at the start of the new year until at least after the Chinese New Year, probably the second quarter of 2022.
5 Pinnacle Protection Enterprises is assisting customers to mitigate supply uncertainties.
5.1 To assure customers of supply and competitive pricing, PPE holds stock for contract customers and we have introduced new offerings for Disposable Nitrile Examination Gloves including:
– Container share for significant users of Gloves – 4000 boxes or more
– Container Pre-Buy for containers on the water, offering competitive pricing and secured supply for orders exceeding 200 boxes.
– Wholesale supply for larger orders of floor stock
5.2 4g Medical and Laboratory Examination Gloves available now
5.3 Own Manufacture of many line items including Lab Coats, Coveralls, type 5/6 equivalent coveralls and Food covers, to mention a few.
5.4 Pinnacle Protection Enterprises now offers an exclusive superior and more durable brush ware range ideally suited to South African and African Markets which is Food, Hygiene and HACCP compliant.
Please contact us to secure your supplies.
We thank you for your support which we treasure.
Brian G Wright
To find out more please give our team a call, or send an email, to secure your supply or to arrange a presentation. You can also visit our website www.pinnacleppe.com/?product_cat=premium-brushware
Look out for further announcements as Pinnacle Protection Enterprises with our group of companies has more exciting plans and announcements. We are in the process of evaluating acquisition growth opportunities, which we always welcome. Our group already has interests in Logistics, Automotive, IT, Marketing Services, PPE, Disposable Wear and Hygiene Systems and Standards.
Email us at firstname.lastname@example.org or call 011 493 9511 TODAY!