Supply Chain Crunch Spurs TotalEnergies to Increase Logistics Costs on Polymers
February 02, 2022
Ongoing supply chain issues has prompted major resin producer TotalEnergies to increase logistics costs on all of its Polymer products.
In a letter to customers, the company said effective March 1, it will apply a temporary surcharge on its polymer products consisting of a $.01/lb increase on all bulk truck deliveries, and a $.02/lb increase on all shipments of packaged products.
"Our business has faced substantial increases in costs to ship product due to labor shortages, truck capacity, rising fuel prices, and packaging costs among others," TotalEnergies said in its correspondence to customers. "As a result of this cost pressure, there is an urgent need to act to ensure sufficient availability and continuity of supply for materials delivered by truck."
The company added that the increase is in addition to any change in monomer, index, or market pricing.
The logistic surcharge is just the second that has been announced by a major resin producer for 2022.
In January, LyondellBasell announced a price increase to its bulk hopper-truck and packaged product upcharges, effective February 1, which included $0.01/lb increase on bulk hopper-truck shipments and a $0.02/lb price increase for packaged product shipments.
The shortage of truck drivers has hit petrochemical and resin companies especially hard as packaging materials, labor, warehousing, freight, and terminal costs keep increasing. The trucking industry has also struggled with driver continuity for a variety of reasons, including the retirements of experienced drivers, drivers departing the industry, and a highly competitive recruiting market between carriers. The industry is also facing increased costs for new and used shipping assets.
The shortage of drivers has also led other major logistic companies to issue driver pay increases to be more competitive. In early January, North American supply chain services company Quantix said it would roll out targeted pay increases in its plastics and liquid chemical divisions as part of the largest driver compensation change in the company's history, totaling more than $30 million.
By Brian Balboa for The Plastics Exchange.
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