Supply chain problems continue to plague chemical industry

Supply chain challenges and freight transportation disruptions continue to affect the U.S. chemical industry and the broader economy, according to a survey of chemical industry leaders, released Thursday.

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The majority of business leaders surveyed by the American Chemistry Council (ACC) said the disruptions are affecting their U.S. manufacturing business, with most reporting that they have modified operations because of supply chain issues and/or transportation disruptions that occurred in the latter half of 2022.

The ACC survey focused on business impacts through the second half of 2022 (H2) compared to conditions in the first half of 2022 and compared to conditions prior to the pandemic. Overall, the results show that transportation-related supply chain issues moderated during the second half last year but continue to be worse than conditions prior to the pandemic.

“There are signs that conditions have improved, but the transportation problems plaguing our members are far from resolved,” Emily Sanchez, economist for ACC, said in a press release announcing the survey’s findings. “Marine and truck transportation have improved while poor rail service continues to be a major concern.”

Key survey findings include:

• 93% of companies said supply chain and freight transportation disruptions are impacting their US chemicals manufacturing business.
• Compared to conditions in the first half of 2022, 67% of companies reported supply chain and freight transportation disruptions were generally better in the second half of the year. Compared to conditions prior to the pandemic, however, 83% of companies say they are worse.
• 86% of respondents said they modified operations because of supply chain issues and/or transportation disruptions and delays in H2.
• In both the first and second half of 2022, about 36% of companies said their customers canceled orders because they were concerned those orders would not arrive or would not arrive on time.
• Supply chain issues and transportation disruptions continue to push up transportation costs. More than half (62%) of chemical manufacturers saw costs rise over H2.

Survey respondents also said that policy reforms are necessary to correct the problems affecting chemical supply chains. Those include actions to increase competition and establish minimum service standards in the rail industry, and efforts to increase gross vehicle weight limits for interstate highways to help alleviate trucking capacity constraints.