FOR IMMEDIATE RELEASE:
Urgent Nail Update
Dear Valued Customer;
YOUR NAIL CONTAINER WILL BE LATE
If you placed an order in the early fall and your container was to ship in December it will most likely be 30 – 45 days late. If your order was to ship in January for March delivery it could be 6 to 8 weeks late, as the container shortage will mean many January loads wont ship, and then they will have to wait till the plants reopen On March 1. As we have been warning for the past few months the supply chain is broke. When orders get that far backed up for shipping , eventually the plants have to stop producing because they have no floor space to store additional production before shipping. It is finite. Please click the link to the two articles published in the Journal of Commercial , the Trade publication for global shipping.
THE GLOBAL SUPPLY CHAIN IS BROKEN
There are 20 ships anchored off Los Angles waiting a week to get unloaded, but there is no dock space available due to the mass volumes of containers coming in to the US Market. These ships average 22,000 containers each, that’s over 400,000 containers waiting to unload. Imports from China show a 21% increase in containers over 2019, and mostly compressed to ship all in 7 months. Need a mattress, used to get it the same day, now the one you want can be 8 weeks. Want a specific washer and dryer, 7 weeks. New Bicycles 3 months. Not the time to discuss the who , what , why and where, the reality is the demand has strained the system. As a result there is a mass shortage of containers in Asia, Europe and India because they are all on the Docks in the US or sitting on ships. This pressure and demand on Ocean freight has pushed ocean rates to double since summer and now continue to go up until the 3 week annual China shutdown for Lunar New Year that is on February 6 this year. Average East Coast 40 ft freight was $3700, is now $7500 if you want to move your cargo.
Many nail importers have delayed their shipments hoping rate would fall, but that never happened. Now some of them are demanding $1,000, $2,000, and as much as $3500 freight premiums if you want your cargo shipped. That is just wrong, immoral, and possibly illegal . The contract is an agreement by buyer and seller to deliver the merchandise at an agreed price. Unless the contract has a Force Majeure clause or stipulation for increase it is just wrong. These factors are leading to a very tight supply market for all types of nails. Beware of who your supplier is. Will they honor their commitment, do they have the resources to handle these challenges.
MACRO & MICRO ECONOMIC DRIVERS OF SHORTAGES AND PRICE INCREASES CONVERGING
Rarely do you see a confluence of both Macro and Micro factors driving the market. We have all of that happening now;
Weaker dollar raising overseas costs due to exchange rates. The dollar has lost 9% vs Chinese RMB since September.
Iron Ore is at an 8 year high, this is the key component of making steel.
Wire rod globally went from $456 a ton in November to $560 in December, $600 for January, and $700 is on the horizon.
Tariffs are still 25% on Chines nails, and for those that legally follow it, ( and many don’t), this adds to the cost measurably. 25% of a $10.00 nail is $2.50 a box, but on a $13.50 box, the tariff is driven up to $3.25, or a $.75 a box adder.
Ocean freight for the first half of 2020 averaged $2.30 a box is now $4.05 if you can find space.
Demand has driven lead times of “HONEST IMPORTERS” 6 – 7 months, meaning order now see it in July. For many years it was 90 days from order date.
WHAT DOES THIS MEAN AND HOW DO WE NAVIGATE THIS BROKEN SUPPLY CHAIN.
Deal with reputable Suppliers. CMI is the largest direct nail importer of all types of nails. We have never asked our customers to pay a penny more than we agreed upon with the order.
We absorbed $100’s of thousands of dollars in excess freight in 2020, that is not sustainable and we will have to work with our customers for a fair balance in 2021.
Extended lead times contribute to this. There is no way to know the cost today of a nail we are going to have produced and shipped in May 5 months from now.
We have to look at a Price Time of Shipment scenario, or factor this into the cost to assure you our Distribution partners you will have product, and not that we have to absorb and assume all the risk. This will not allow us to continue to be here to supply you, long term. We will discuss that with you.
We are implementing soft allocation, using our capacity to supply and support our regular customers
There is less nail capacity than ever before as 40% of the China nail plants have shut down or gone bankrupt in the last 3 years. No other country has capacity that equals 10% of China’s, they are the roofing nail producers of the world. This is meant to give you the necessary information , the honest answers and to point out the dynamics driving the current nail shortage, that if you don’t know about yet, you will soon and we hope you are planning accordingly. Every Month we ship enough roofing nails to do 75,000 houses and we will continue to use our resources to be your supplier, provide you the best quality product that meet specifications, delivers with the best on time record in the Industry and serviced by Nail and Import Specialists.
Thank you for your business , your trust and faith. We wish you and your families a Safe and Happy New Years.
Continental Materials, Inc. (CMI) is a national supplier of roofing system component materials and known for BUR (built-up roofing) asphalt with “No Smell”™ odor eliminating technology and its WeatherSeal™ protective packaging, All-Weather™ asphalt felts and coated organic rolls, CMI All-Weather™ modified bitumen rolls, SureGrip™ construction fasteners and roofing nails, Continental’s eco-friendly high density fiberboard roof insulation board and a premium line of SecureGrip™ synthetic roof underlayment products that are sold and used widely throughout the country. CMI has provided value added products and superior service to the roofing industry since 1958.
For more information on CMI products, call (215) 884-4930, visit www.continentalmaterials.com or contact your local CMI Sales Representative.