The recent hurricanes have turned out to be major disasters, and my thoughts and prayers go out to everyone dealing with the destruction of Harvey and Irma. The economic impact is reverberating throughout North America, and the plastics industry was hit particularly hard.
Many resin companies produce their materials in Houston. We are fortunate and have product readily available, but many suppliers aren't as lucky. As a result of the Hurricane, some companies have declared “force majeure.” This is a contract provision where companies are relieved of contractual obligations due to unforeseen circumstances. Basically, they cannot physically meet their deliveries. History tells us a few things about this type of uncertainty. There are two possible consequences.
RESIN PRICE INCREASES
These increases come down to supply and demand. Processors can realistically expect problems with availability. Allocation or partial deliveries are also possibly as resin suppliers try to meet customer demands.
LOGISTICAL DELAYS
Logistical problems can add to delivery delays. Rail cars of resin and product out of the Houston area will likely be sitting for a while. In general, rail cars cannot move until the rails are dry and safe. Any other available resin on the market will endure additional freight charges as they are moved from place to place on their way to their final destinations.
Not much is certain in the aftermath of storms of this magnitude, but eventually things will get better. There may be changes to your businesses, but the industry will adjust and move forward. The damage will be cleaned up and the people will bounce back. We are all in this together.
If you’d like more information on how to improve efficiency, reduce wasted resin, minimize scrap after color and material changes in your facility, contact me directly, or download this Tipsheet on how to improve your process efficiency.
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