If you’re reading this and haven’t been disconnected from the outside world for the last 60-days, then I don’t need to tell you that the Novel Coronavirus (COVID-19) has completely flipped the world on its head. Global markets, supply chains, manufacturers, and financial markets have all come to a turtle paced crawl in the last 30 days with the impacts being felt in every corner of the globe – and the FIBC industry is no exception.
We’ve talked about FIBC sourcing a lot on the NBB blog (click here to see all of our posts on sourcing), and it’s no secret that the vast majority of bulk bags are sourced overseas. With COVID-19 hitting Asian nations particularly hard, it’s almost impossible to imagine this pandemic having a zero impact on the overseas sourcing of bags. Just how big will this impact be? How will it impact the industry in the long run? Let’s explore.
COVID-19's Impact on Bulk Bag Sourcing
As stated previously, the vast majority of FIBCs are sourced from overseas manufacturers. They are then shipped to US distributors for sale and distribution throughout the continental United States. Under normal conditions, this system allows US companies to get a consistent supply of bulk bags at extremely competitive prices. However, this also means that the US supply of bags is heavily reliant on global supply chains and thus much more vulnerable to disruptions in those chains.
Typically, lead times on distributor orders (for example, a custom FIBC) are in the range of 60-90 days. That is, the time it takes from putting in an order with an overseas manufacturer to actually receiving that product state-side. However, due to the massive shutdowns caused by the Coronavirus in overseas manufacturing plants (particularly in India), we’ve already seen significant increases in these lead times. It’s more important than ever that your distributor has good relationships with their overseas partners in order to accurately forecast any potential delays in product delivery.
The Initial Impact on the Industry
As we’ve seen recently in India, the lockdown of manufacturers abroad has already created extended lead times on the sourcing of bulk bags. That’s the short-term impact thus far. The longer-term impact could be the potential of increased bag prices as the demand continues to increase or stay the same and the US supply continues to dwindle. We haven’t seen a drastic price increase as of the writing of this post, but it could be coming sooner than later – so prepare accordingly if possible.
I Need Bags... What Can I Do?
If you need bags right now, contact your distributor immediately and talk about availability. During times like these, it’s more important than ever to find a trusted supplier with a good in-stock inventory. Finding a distributor with domestic warehousing is extremely important as the chances they have stockpiled inventory are significantly higher than other distributors that lack warehousing space.
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