Supply chain, freight transportation problems plague chem manufacturers – ACC survey

HOUSTON (ICIS)–Chemical manufacturers in the US have continued to be plagued by major supply chain and transportation issues that have led to 97% of respondents modifying operations, according to the results of an American Chemistry Council member survey.

This is the third member survey conducted by the ACC since December as it worked to gain a better understanding of the challenges faced by its membership.

“For three consecutive quarters, companies reported that supply chain and freight transportation disruptions harmed their US manufacturing operations,” the ACC said. “Over that same period, companies reported having been negatively impacted by ongoing supply chain and freight transportation disruptions.”

PORTS/OCEAN SHIPPING
One of the findings showed that more than half of respondents (52%) were forced to reduce production due to the inability to export material.

“Lack of capacity in every mode is affecting ability to deliver products, however, ocean moves continue to present the biggest challenges at this time. Port congestion appears to be getting worse,” a respondent said.

“Lack of available empty containers and vessel space hurting export sales,” another respondent said.

The survey showed 76% of respondents cited a shortage or imbalance of shipping containers, and 76% said they have seen increased costs from diverting shipments to alternative ports because of backlogs and congestion.

Ports, Ocean Shipping	Worse	Same	Improving
Jul-22	33%	48%	19%
Mar-22	55%	39%	6%

Source: American Chemistry Council

As shown in the table above, fewer respondents said conditions are worsening, and more said they were seeing improvement.

Other impacts to business in Q2 for companies that rely on ocean shipping included increased rates (87%), longer transit times (95%), cancelled bookings (87%), increased demurrage/detention charges (82%), shortages or imbalance of shipping containers (76%), increased costs from diverting shipments to alternative ports (76%), and higher costs due to rerouting (63%).

RAILROADS
Companies who ship by rail are seeing worsening conditions.

Rail	Worse	Same	Improving
Jul-22	46%	48%	7%
Mar-22	39%	53%	8%

As shown in the table above, more respondents said conditions are worsening, and fewer said they were seeing improvement.

A large number of rail users reported longer transit times (90%), missed switches (66%), increased demurrage charges (59%), reduced service days (64%), and higher rates (59%).

Many (43%) of companies report they have added tank cars to their fleet because of freight rail service issues.

“In rail, the situation seems to be getting worse. We are seeing longer transit times as well as customer holds,” a respondent said.

“Insufficient trained labour is resulting in increased transit times to and from our customers,” another respondent said. “This results in supplementing railcars with trucks in an emergency, finding alternate modes of transportation (barge) and increases in railcar fleet sizes.”

TRUCKING
The survey results suggest improvements in trucking from the previous survey, although contract rates remain high.

Trucking	Worse	Same	Improving
Jul-22	29%	45%	26%
Mar-22	55%	38%	8%

Nearly all companies (98%) continue to report increased trucking rates.

However, according to data from supply chain market intelligence provider Freightwaves, spot rates for inland trucking have fallen well below contract rates, leading a market analyst to say that contracts rates could follow.

Driver shortages continue to be one of the main issues in the trucking industry, and 81% of respondents said the labour shortage has impacted their business, with 63% saying they are seeing longer transit times.

Thumbnail shows a railroad track. Image by Shutterstock.