Archive for July, 2008

29
Jul

Impact of oil price widespread

Filed under: Pricing Trends — Michael Prather @ 9:36 am

The effects of rising crude oil prices stretch far beyond freight costs. Down to the cost of raw materials, oil’s effects impact nearly every stage of the supply chain. Consider for example that polyvinyl-chloride (PVC) resins, the primary component used to produce disposable vinyl gloves, is comprised of over 40% ethylene. A derivative of petroleum, ethylene costs virtually parallel the cost of oil.

Having already increased by more than 25% since the start of the year, PVC costs would be even further inflated had raw material producers not hedged petrol prices when oil was trading around $110/barrel. Still, despite the retreat in oil prices in recent days, oil is unlikely to return to the hedged price, meaning that further increases in raw material costs in the weeks ahead are nearly inevitable.

Read more:
If it has oil as ingredient, you’re paying more for it
Current PVC prices

24
Jul

Dockworkers on West Coast Close to Labor Agreement

Filed under: Supply & Distribution — Michael Prather @ 4:12 pm

As reported today by Logistics Management, labor disputes which have slowed work at West Coast ports since the start of the month appear to be on the verge of resolution. Negotiations between the International Longshore and Warehouse Union (ILWU) and Pacific Maritime Association (PMA) have been under way since the previous contract expired on July 1. According to Reuters, the current clash has slowed productivity at both Los Angeles and Long Beach ports by as much as 30%.

Further reading:
West Coast dockworkers say labor agreement is near
Slowdowns cut productivity at LA ports 20-30 pct

21
Jul

MARGMA Threatens to Reduce Supply

Filed under: Pricing Trends, Supply & Distribution — Michael Prather @ 5:12 pm

Late last week, the Malaysian Rubber Glove Manufacturers’ Association (MARGMA) released a statement (see below) threatening to reduce supply if buyers do not accept price increases resulting from increased natural gas prices.

The increased natural gas prices are the result of subsidy cuts announced by the Malaysian government in early June. MARGMA claims that, combined with higher raw material prices, manufacturing costs for latex exam gloves have increased by as much as $9.00 per case.

See also:
Inflation, oil send costs of medical supplies soaring

18
Jul

Medical Glove Production Impacted by New FDA Standards

Filed under: Regulatory Compliance, Supply & Distribution — Michael Prather @ 9:09 am

New FDA standards governing the reliability of disposable medical and surgical gloves take effect December 19, designed to reduce the risk of transmission of blood-borne pathogens.

These new FDA standards:

- Apply only to medical and surgical grade gloves, and measure only for defects, not for phyiscal properties such as tensile strength or elongation
- Harmonize FDA and ASTM standards, although the FDA standards includes testing for visual defects at the same AQL level as for pinhole defects
- Lower AQL levels for medical and surgical grade gloves to 2.5 and 1.5, respectively.

These new standards have already increased costs and created shortages in medical gloves. Because even one failed FDA inspection can place a manufacturer in detention, most reputable manufacturers were already producing gloves to stricter standards. Now, with new FDA standards taking effect, manufacturers will be forced once again to adopt practices to ensure their gloves exceed even these newest standards. With these changes comes additional costs in materials, process, and inspection–all of which are being passed directly to suppliers.

At the same time, suppliers dependent on less reputable manufacturers are now frantically in search of product, as these manufactuers fail to meet the stricter standards. With less supply, competition continues to drive prices upward as suppliers compete to secure product.

See Also:
New FDA Medical Glove Standards
FDA Dention Policy
FDA Medical Glove Guidance Manual

17
Jul

Dense Fog in Northern China Inhibiting Freight Transport

Filed under: Supply & Distribution — Michael Prather @ 9:29 am

Tradex received word this morning that residual fog in Northern China, namely in the port city of Qingdao, continues to impact loading procedures on vessels. The fog, prevalent since the start of the year, is forcing closures with increasingly frequency. Port closures occurred almost daily in June, delaying shipments on average by four or more days.

Olympic preparations have also reduced vessel traffic in and out of the port, as Qingdao plays host to several events in next month’s Games. Measures to reduce pollution (see entry dated July 8) have extended into the port city, as the government aims to control water contamination by limiting the number of ships entering and departing from shore.

Photos:
Fog in Qingdao
Algae Cleared from Olympic Venue

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