New kinks in the Supply Chain
Coronavirus Impact on Supply Chain July Update
As most supply availability stabilizes, many prices are rising.
Supply Chain Challenges as Coronavirus Continues
Our current struggle seems to be getting goods from Mexico and India. Mostly fittings, as of now.
Both countries started coming out of their lockdowns in June. And, just like the US, both of them saw a huge surge in cases.
Our previous update was based on the assumption that things would slowly be coming back online by the end of summer. Now, it appears factories and docks will still continue to split shift and run at reduced capacity, to once more try to slow the spread of COVID-19.
The sky is not falling, we are still sourcing >95% of what we need without issues, but <5% still carries a prolonged lead time of months on end.
Below are current new stats for Covid-19 cases, as of right now, for these two countries.
On the flip side of all this, is an increase in the value of goods. Many price increase letters have been sent, and many price files were updated recently to reflect those higher stock costs. The new pricing is due to both the increase cost of transportation (in very high demand) as well as COVID-19 related cleaning and split work shifts, to help keep workers safe.
These are not huge fluctuations in cost, less than 5% in most cases, but still an increase on a lot of what we buy and sell.
The biggest jump has come in the cost of copper and copper-related goods.
As you can see below, we are riding a wave of copper value pricing. We are nearly back to the highs of Q4 2019.
China has recovered faster, and started consuming metals again. That caused a spike in pricing. But also, there is less copper coming online from the mines.
The top two copper producing nations, Chile and Peru, are just now being hit by the Coronavirus. As those cases continue to climb, those countries will start to pull back on production as the rest of the world has, as they are forced to limit their workforce.
It is important to note, unlike finished goods, there will not be a shortage of copper, even if many of the largest mines shut down. We have drawn enough copper from the earth to last for years, and it is easily recycled. Instead of a shortage, you will just see a continued rise in cost per pound instead.