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To put it mildly, it’s not getting any better, and the best estimate is Q2 before we feel any relief. If you have been following my updates, you know there are major issues in the dietary supplement industry severely disrupting the supply chain. Part of the problem is caused by logistical issues that continue to worsen with no relief in sight.
Transportation, both domestic and international, is a big part of the problem. Our ports are understaffed, and we just can’t offload containers as quickly as we could pre-COVID. This is causing a backup of cargo ships that are sitting off our ports waiting to be unloaded. That combined with the fact that record numbers of cargo ships are coming in from China, and you can understand why our oceans, in proximity of these ports, are starting to look like massive parking lots. I recently flew over Jacksonville and saw dozens of cargo ships dotted across the horizon.
All those unloaded cargo ships are sitting out at sea tying up containers. Add that to the huge trade imbalance, meaning cargo ships are coming in full and leaving empty, and we can understand why our freight yards are overflowing with empty containers. No containers going back overseas—well, that’s where it starts to get really bad. Worldwide shipping is coming to a standstill because of a shortage of metal boxes.
Shipping a container from China to the United States used to cost $2,500–$3,500. Now, that same container costs $18,500, and it’s rising every day. The Asia Pacific is not the only problem, as the container space is virtually nonexistent worldwide. Costs for shipping a container from Europe have risen from $3,000 to upwards of $22,500.
Domestic shipping costs are no better. I used to pay about $3,000 to ship a truckload of empty bottles from California to New Jersey. That same truckload now costs me between $8,500 and $10,000. It’s not just the cost that is causing the hurt; shipping time for that truckload has gone from 3–5 days to 1–3 weeks.
Transportation is only part of the problem. Factory shutdowns worldwide, raw material shortages, workforce shortages, and dozens of other issues are plaguing not only the dietary supplement industry but all industries.
Here is an example: The price of whey protein concentrate (WPC80) has risen by 142% in two months and continues to increase. Logistics is not causing this problem, but it is still China related. China is buying up U.S. whey protein. One of the largest whey suppliers sold off 80% of its stock for twice what the domestic market was paying. China needs whey to feed its growing pig population that was wiped out by swine flu, and they are buying it out from under us. There is a shortage of whey, and it won’t get better anytime soon.
Supplement store owners beware, it now costs a brand more to manufacture a tub of protein than they sold it to you for last month. As brands sell out of their whey concentrate products and replenish their inventory, prices are going to skyrocket. Expect 1.5x to 2x higher costs for whey concentrate products in the coming months. Whey isolate was cheaper than whey concentrate for the last 30 days, but of course it didn’t take long to catch up. Isolate is closing in on 2x its cost compared to 45 days ago. We are all in for challenging times.
By: Mark Glazier
Transportation, both domestic and international, is a big part of the problem. Our ports are understaffed, and we just can’t offload containers as quickly as we could pre-COVID. This is causing a backup of cargo ships that are sitting off our ports waiting to be unloaded. That combined with the fact that record numbers of cargo ships are coming in from China, and you can understand why our oceans, in proximity of these ports, are starting to look like massive parking lots. I recently flew over Jacksonville and saw dozens of cargo ships dotted across the horizon.
All those unloaded cargo ships are sitting out at sea tying up containers. Add that to the huge trade imbalance, meaning cargo ships are coming in full and leaving empty, and we can understand why our freight yards are overflowing with empty containers. No containers going back overseas—well, that’s where it starts to get really bad. Worldwide shipping is coming to a standstill because of a shortage of metal boxes.
Shipping a container from China to the United States used to cost $2,500–$3,500. Now, that same container costs $18,500, and it’s rising every day. The Asia Pacific is not the only problem, as the container space is virtually nonexistent worldwide. Costs for shipping a container from Europe have risen from $3,000 to upwards of $22,500.
Domestic shipping costs are no better. I used to pay about $3,000 to ship a truckload of empty bottles from California to New Jersey. That same truckload now costs me between $8,500 and $10,000. It’s not just the cost that is causing the hurt; shipping time for that truckload has gone from 3–5 days to 1–3 weeks.
Transportation is only part of the problem. Factory shutdowns worldwide, raw material shortages, workforce shortages, and dozens of other issues are plaguing not only the dietary supplement industry but all industries.
Here is an example: The price of whey protein concentrate (WPC80) has risen by 142% in two months and continues to increase. Logistics is not causing this problem, but it is still China related. China is buying up U.S. whey protein. One of the largest whey suppliers sold off 80% of its stock for twice what the domestic market was paying. China needs whey to feed its growing pig population that was wiped out by swine flu, and they are buying it out from under us. There is a shortage of whey, and it won’t get better anytime soon.
Supplement store owners beware, it now costs a brand more to manufacture a tub of protein than they sold it to you for last month. As brands sell out of their whey concentrate products and replenish their inventory, prices are going to skyrocket. Expect 1.5x to 2x higher costs for whey concentrate products in the coming months. Whey isolate was cheaper than whey concentrate for the last 30 days, but of course it didn’t take long to catch up. Isolate is closing in on 2x its cost compared to 45 days ago. We are all in for challenging times.
By: Mark Glazier
