The coronavirus crisishas affected many industries. Plasterboard is one of them. Due to mandatory lockdowns and borders closure, goods movements have been limited.Global economic activities have been damaged. This has led companies to not only slow down their trades. But also, rethink their organizational structures and work habits.
In this article, we are going to talk about how this crisis has touched the plasterboard sector.
Challenges Faced in The Drywall Industry
Although China is the main and major trade partner for many countries, economic impact of Covid-19 has started from there.
Containers Waiting at Port of Loading
Effectively, the incidence on global supply chain had a huge impact at China’s major container’s ports:
Raw materials shortage
Backlog of cargos
After that, containers volumes dropped at China’s ports. Consequently, weak demand has affected business relationships. Namely Asia and Europe, USA and Latin America, USA and Asia, Europe and Africa and vice-versa.
Increasing Costs and Materials Shortage
Firstly, drywall sector has suffered from shortage of raw materials and final products. Thus, this has resulted in:
lead times lengthening
For instance, this has been the case for raw materials such as:
Supply vs. Demand in Drywall Sector
Secondly, there is a highdemand in terms of plasterboards. Especially across Europe. This is considerably putting pressure on suppliers. In fact, they are struggling to meet customers’ requirements.
In a spectacular way, global demand is exceeding supply. Which is inevitably creating price inflation. Therefore, high demand and narrow offer generate increased prices. This is expected to continue during the second half of 2021.
All in all, price inflation, raw material and components shortage are expected to pursue for months.
Logistic Challenges Affecting Global Trade
Similarly, freight forwarders and ocean carriers have been affected as well.
Cancellation of Sea Crossings
Cancelled Sailing due to Shipping Backlog
For example Maersk, Hapag-Lloyd, CMA-CGM, ONE, MSC have cancelled sailingsduring weeks. Thousands of ships have waited at the quayside. Which has resulted in shipping backlogs in ports of loading.
Increase of Freight Rates
In other words, this has led tohigher freight rates. Indeed, shipping prices have reached historic level. This is predicted to go up even more for the rest of the year.
As mentioned in the Wall Street Journal , the average freight cost for a 40 feet container has quadrupled from a year ago. Besides, for some seal lines, spot rates are expected to keep increasing: up to 70% by achieving record level closer to $20,000 per 40 feet container.
Ever Given Containers Ship Blocking Suez Canal
On top of that, another threat was Suez Canal obstruction in March 2021. The incident has resulted in three main issues:
Shipping delays of everyday items
Shortage of raw materials
Rise in oil prices
Containers Shortage and Lead Times Lengthening
Moreover, logistic challenges have generated containers shortage and unavailability of vessels. Therefore, movement, storage and flow of goods have been seriously affected. To clarify, plasterboard suppliers have struggled to keep up with material deliveries and extended lead times.
Establishment of New Strategies by Key Players
However, main actors have decided to face the challenges in order to bounce back. Most importantly in plasterboard industry, players have rethought their initial strategies. That is to say, they have adapted themselves to the changing environment. All this in order to ensure their sustainability on regional and international markets.
In the same vein, many actors have decide to respond to the rising demand by expanding their geographic localization.
New Production Lines
On the one hand, Saint-Gobainhas invested €45 million in a new plasterboard manufacturing line in Romania. That is to say, the goal is to meet local, Central and Eastern Europe demand. Likewise, Saint-Gobain’s is seeking to maintain its leader position in “light construction markets”.
Increase of Production Capacities
On the other hand, Etex Grouphas decided to invest £140 million into a new plant in Bristol (UK). As demand is exceeding industry’s supply availability, Etex is willing to increase production capacity in the UK. By this way, Etex is planning to expand its production capacity of 50% for Etex’s Siniat brand.
Strategic Localizations Near Sea Ports
Subsequently, Etex group’s new location is strategically close to the Royal Portbury Dock. This is an opportunity to import raw materials effectively and ship orders just in time.
Full Vessel Shipment
In order to deal with logistic issues and minimize impacts, construction partners have thought about advanced planning.
Indeed, ordering and planning ahead have been a solution. So, customers are placing their purchase orders weeks in advance to ensure stock availability.
Full Vessels Shipment
Last but not least, given that freight prices will not fall back to normal levels, full vessels shipments have been an alternative. In fact, weeks in advance, full vessels are booked at the freight forwarders sides. To conclude, companies are desperately trying to ensure early deliveries for projects completion.
Board & Wall Co. is a drywall materials supplier company based in Istanbul, Turkey. We are currently exporting to 25 countries in Europe, Africa, Middle East, The Caribbean.