October 2021
Market Update
Disposable Glove Market Update
Disposable Glove Market Update
Disposable Glove Market Update
Disposable Glove Market Update
Heading into Q4 of 2021, the worldwide economy remains in flux—and that includes the disposable glove market. While the initial COVID-related surge in demand for disposable gloves has normalized and prices have taken a step back, we are still feeling the effects of 2020. At the same time, demand for disposable gloves remains strong.
A number of factors are impacting the disposable glove market and will continue to for at least the next three to four months. The coronavirus spread in Southeast Asia has many manufacturers running at half capacity; workforces are restricted by movement control orders, further cutting into production; and intra-country shipments, from raw materials to printing to transportation of finished goods, are limited.
On the global supply chain front, challenges including a shortage of containers and ships, longer lead times transporting products to U.S., logistical challenges at U.S. ports, and carrier issues from points of arrival to warehouses, are resulting in remarkably higher shipping costs.
The overall outlook for disposable gloves, however, is positive. There is continuing demand from hospitals and other businesses that are coming back online; businesses that rely on gloves for their employees do not want to be caught with low supplies ever again; and a general continued focus on health, hygiene, and safety will keep disposable gloves in the spotlight for some time to come.
We continue to see signs that, similar to other global health crises such as the swine flu of 2011, there is a lasting increase in demand for disposable gloves.
SOUTHEAST ASIA CONTINUES TO BATTLE THE PANDEMIC
Due to low vaccination rates and rapid spread of variants, COVID-19 continues to present a broad set of challenges in Southeast Asia, causing lockdowns, impeding labor movement, and upsetting transportation networks.
Malaysia and Thailand account for about 80 percent of global disposable glove production. Both faced serious challenges from the pandemic in the last few months.
Malaysia has been hit hard by COVID-19 outbreaks, enduring multiple rounds of lockdowns and a state of emergency that have limited glove production to about 50% of capacity.
Labor restrictions in Southeast Asia have impacted both raw materials and factory output. Three months of lockdowns in Vietnam have shuttered factories and forced some companies that had moved operations there back to China. Manufacturing across the region has been badly affected and “remained in a downturn in August,” according to a survey of 2,100 factories.
Intra-country transport and logistics has been gradually resuming operations and incorporating different strategies to adapt to the new normal. However, for the rest of the year, the industry is expected to face a tough road. Non-transparent and protective tariffs, non-tariff barriers, and high costs of connectivity will force companies in the transport and logistics industry to further rethink their business models.
Manufacturers are experiencing limited production capacity, which will impact the overall number of gloves available in the marketplace. Further hampering availability are the many challenges facing transportation systems between SE Asia and North America.
RISING SHIPPING COSTS IMPACT GLOBAL SUPPLY CHAIN
It’s being called a perfect storm. The global supply chain for a broad range of products is under unprecedented stress in the countdown to the 2021 holiday season, when retailers and brands can make up to 35 percent of their annual sales. Shipping congestion is both slowing down deliveries and driving up costs.
Disposable gloves are not exempt from supply chain-based chaos. From labor shortages in Southeast Asia factories brought about by surges in COVID-19 cases to scarcity of container vessels to closed ports to backed-up ships off the coast of California, countless commodities and consumer products alike are not getting through.
Disruption is reported across the whole chain, from sourcing to last-mile delivery. In the U.S., booming consumer demand has put pressure on port and warehouse capacity, while labor shortages have meant fewer drivers on the road and fewer products delivered on time.
As imports continue to surge leading up to the peak holiday season in the United States, container ships were being held up off the twin ports of Los Angeles and Long Beach in numbers nearly five times greater than in pre-COVID-19 times, according to a report by Freightwaves.com. Transit times from China to the U.S. have increased by 78%, while costs have also jumped 21% compared with before the pandemic.
Elevated consumer demand and bottlenecks throughout the supply chain suggest it may be a while before stockpiles can be rebuilt to historical levels (relative to sales), meaning the dynamics of this freight cycle could potentially linger into next year.
Worldwide port congestion could last until well past February 2022 as retailers decide they want to use the traditionally slow period after Lunar New Year to refill inventories and avoid the stockouts that occurred during 2021, according to Drewry maritime research.
Ports are already swamped by record numbers of containers reaching U.S. shores during this year’s peak shipping season, and the number of vessels waiting for berth space at Southern California’s gateways is growing as logjams stretch into warehouses and distribution networks across the country.
As the holiday season draws nearer and pressure on shipping to reduce delivery times increases, costs will only continue to rise. No relief is expected in Q4 of 2021.
U.S. ECONOMIC RECOVERY AMID THE COVID SURGE
For most of 2021, the U.S. economy has expanded at a torrid pace, as industries that were shut down during the pandemic—especially restaurants, hospitality, and travel—reopened. The Organization for Economic Cooperation and Development projected that the U.S. economy will experience 6% growth in 2021, putting it substantially ahead of where it was a year ago.
Disposable glove sales, meanwhile, are forecast to continue to grow at double digits for the next few years after an extremely busy 2020. The new normal will be chaotic: With the COVID variants showing no signs of slowing, demand for disposable gloves is going to remain high.
Across all industries, businesses need more disposable gloves than compared with demand before the pandemic. Hospitals in many parts of the U.S., currently overrun with coronavirus cases, will continue to consume disposable gloves and other personal protective equipment at unprecedented rates. Janitorial operations will see increased focus as sanitizing commercial environments takes even higher priority. As heavier industrial-grade nitrile gloves begin to come back into regular inventory, sales to automotive and construction customers will rise.
Glove prices, which had come down a bit, are impacted by strong demand and the high cost of logistics. There is a lot of scrambling going on to secure inventory of gloves at the best prices, although some price fluctuation is unavoidable.
Industry experts point out that COVID-19 has lifted growth of disposable glove use in terms of demand for the industry, and beyond the immediate surge in demand during the pandemic, they say that the use case for gloves will continue to increase as hygiene awareness grows.
With acute high demand for gloves and supply chains struggling through the busiest season of the year, we expect inventory to remain volatile for the remainder of 2021.
DISPOSABLE GLOVE MARKET OUTLOOK FOR Q4 OF 2021
AMMEX is receiving shipments of gloves, including thicker industrial nitrile, every week. Because of the challenges described above, they may not arrive as quickly as everyone would like, and we may not have every size of every glove that customers want. It’s likely there will be further disruptions to the supply chain.
As always, planning and patience are key for our distributor partners. Evaluate your customers’ buying patterns, ask questions, and make your best effort to forecast demand. This market is challenging to time perfectly, so keep your dialogue with customers as frequent as possible.
It can be a delicate balancing act to ensure you are not caught with low supplies vs. overstocking your inventory. Working closely with your AMMEX sales representative can be enormously beneficial.
In talking with our distributor partners, we hear of abundant opportunities to get new business and sell more gloves. Many of our distributors have grown their volume during the pandemic and gained new customers.
Regardless of which category your primary business customers fall into—automotive, food service, salon & beauty, jan/san, or any of dozens more—they are likely going to need more disposable gloves moving forward.
Despite already being the world’s largest market for disposable gloves, the U.S. will continue to see extra focus on health, hygiene, and safety in all businesses and aspects of society, and disposable gloves will be a growing business opportunity for any foreseeable future.
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