December 8, 2021
As 2021 comes to a close, U.S. and Mexican businesses employing cable ties in their manufacturing and assembly processes have reason to consider multiple global sourcing options over primary-source product supply from Asia. This is especially true for automotive OEMs and tiers, appliance makers and HVAC installers.
While Asia has long been a cost-efficient source for cable ties purchased in large volumes, today’s global market environment is tipping the scales in favor of buying them from companies with worldwide production capabilities like Avery Dennison Fastener Solutions. The reasons include supply chain uncertainties, increased transportation and handling costs, nylon availability and the impact of the ongoing pandemic, all of which have undermined Asia-based manufacturers’ ability to deliver products reliably, especially to the United States and Mexico.
Supply Chain Challenges
In recent months many U.S. companies have seen the cost of a 40-ft. container from China to the U.S. spike as much as 500% over 2020 costs: A 40-ft. container’s cost was $4,000 in 2020. In 2021 it has climbed to $20,000, and it will likely increase as we approach the holiday season.
Container delays formerly measured in days are now counted in weeks and months according to freightos.com. For example, China to U.S. ocean shipments took an average of more than 10 weeks in October 2021 to arrive at their final destination, 83% longer than in September 2019. Information on the site is updated regularly.
The uncertainty of disruptions the pandemic may cause in the region and how new outbreaks might affect port closures is another concern. As recently as this past August, a single COVID-19 case closed China’s Ningbo Port, the world’s third-largest container port and a gateway for Chinese exports.
Another key factor is the current lack of availability and increased pricing of nylon type 66 in the Asian market. Growing demand for the resin along with force majeures that affected nylon and feedstock producers in late 2020 and early 2021 put several Asia-based cable tie producers on allocation. As a result, prices skyrocketed, and cable tie supply shortages have become commonplace.
Outlook
At Avery Dennison Fastener Solutions, we are always looking for ways to better serve our customers. This year we opened a new production facility in Monterrey, Mexico, allowing us to be closer to automotive Tiers and OEMs in that region. The plant’s manufacturing capability is dedicated to producing channels and custom parts, opening a new and exciting product line for our customers.
