Covid-19 related lockdowns and restrictions have not only disrupted our personal lives but have also heavily affected global supply chains. The second half of 2021 has experienced global economic recovery for many industries prompting increased demand for raw materials. However, suppliers and producers are struggling to keep up.
Custom Bulk Bags is a supplier of Flexible Intermediate Bulk Containers (FIBCs) to a wide range of industries including food, agriculture and construction. We wish to highlight the issues related to this increased demand for raw materials in order to raise awareness of the impact this has on the bulk bag industry.
The demand for raw materials has affected the bulk bag industry in two ways. Firstly, general increases in demand for raw materials mean that suppliers of raw materials, such as mining ore, need more bulk packaging for the storage and transportation of their products. Secondly, the raw materials needed for the production of FIBCs are limited, which has a major impact on the manufacturing of bulk bags.
Demand for raw materials
During the peak of the pandemic, demand for raw materials was greatly reduced. Global supply chains reacted by lowering output. As the economy started to recover, global supply chains were not prepared to respond. Record levels of demand in recent months have put pressure on weak supply chains.
The bulk bag industry is no exception. FIBCs and their liners are made of polypropylene. Many household and industry goods are packaged in polypropylene because it has several excellent properties. It is lightweight, flexible, and cost-effective.
Polypropylene is also used in the production of a lot of electronic goods. With more people confined to their homes, the demand for electronics has boomed. Increased global demand for polypropylene has slowed, while production of this raw material has been severely hampered – not only due to Covid-19 related restrictions but also by other disruptions to global supply chains.
Price increase of raw materials
Many supply chain managers failed to monitor polypropylene production and the disruptions to international trade in recent years and this has had a negative impact on the bulk bag industry. The latest surge in demand has resulted in a knee-jerk response of panic buying and stockpiling. This has further contributed to a scarcity of raw materials.
The largest component that makes up FIBCs is resin. The fabric, sewing thread and webbing are all derived from a polypropylene resin. As the international supply of this raw material dropped, the price also increased. The price of the resin has also been driven up by rising oil prices.
Looking for sustainable solutions
The rising cost of polypropylene has led many to look to alternative solutions in order to keep the packaging and logistical costs to a minimum. One such solution is to use recycled or refurbished polypropylene in the production of bulk bags. Recycled bags help to keep costs down and are an environmentally-friendly alternative to using virgin polypropylene.
Bulk bags made from recycled materials are suitable for a wide range of industries in the storage and transportation of bulk produce. Agricultural and construction goods can be packaged in recycled polypropylene. However, goods intended for human consumption, such as grains, salt, or spices, need to be packaged in 100% virgin polypropylene in order to meet international health and safety standards.
Longer lead times
The limited supplies of raw materials have resulted in longer lead times for orders to be fulfilled. As a supplier of bulk bags, Custom Bulk Bags recommends placing orders for FIBCs as soon as possible in order to ensure that they are received in time. Where possible, FIBCs can be purchased in bulk quantities to help keep costs down. We are able to fulfill these bulk orders and deliver our products on time.
The shortfall in supplies of raw materials has impacted a wide range of industries and the bulk bag industry is no exception. Recent global events, as well as Covid-related restrictions, have affected the production and trade in polypropylene – the main component needed for the production of FIBCs.
Building a resilient supply chain is the next step for the industry, and supply chain managers need to respond to early warning systems to ensure that surging consumer demand can be met. Keeping logistical costs down helps to maintain competitive pricing. For more information about our bulk bags, please contact us today.
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Custom Bulk Bags is a leading South African manufacturer of woven polypropylene bags for various industries, such as mining, chemicals and food. We are able to produce over 3.5-million bulk bags per year, keeping our customers in-stock at all times. Our bags adhere to the highest levels of quality as a result of our stringent in-house testing and quality control programmes.
Custom Bulk Bags holds ISO 9001 certification and we currently have a number of UN-certified designs. We are a Level 3 B-BBEE manufacturer and supplier and fall under the ownership structure of Deneb Investments Limited. For more information on our products, contact sales@custombulkbags.co.za. Follow us on Facebook for our latest news and industry insights.
