Detailing Chemicals – Supply Chain
As many will be able to relate to, this past year has been very trying for business. Within the chemical sector, this is largely due to the difficulties in sourcing materials and the costs of said materials, when the supply is available. Whilst the consumer has seen relatively moderate rises, as evidenced by inflation figures, the same is very much not true in the supply chain. We would estimate that the majority of materials are a minimum of 10-20% higher in price than this time last year, with there being multiple examples where they have gone up by multiples, with notable instances where this is as much as a factor of 5!
Summary of the chemical supply chain
What is causing the supply issues?
These is no simple answer to this, unfortunately. There are the obvious issues which arise from Brexit, there is no question that GB sourced chemicals have much stronger competition from those sourced directly from the EU. But that is not the end of the story. COVID has led to issues with factories being closed or suffering damage from being closed and this has backed up the supply chain. The base feedstocks themselves are increased, this driven by many of the same factors. Transport costs are dramatically higher. Container availability is poor. Energy costs are dramatically increased. Labour is hard to source and typically costs significantly more than before. Basically, this is a result of a great many factors and this means that no single factor improving will ‘fix’ the problems.
What does this mean to the detailer?
Good question! It probably feels that your average shampoo or wheel cleaner is a long way removed from global supply issues, but this is – sadly – not the case. These general car cleaning chemicals are heavily reliant upon commodity surfactants and these have seen significant increases. Taking the example of coco betaine – an important foam stabilising amphoteric surfactant – prices in November were approximately 30% higher than December 2020. This is far from isolated and all car cleaning products will simply be costing a lot more to manufacture. This is something that may not yet be familiar to non-manufacturers. It is somewhat accepted that raw materials fluctuate but they tend to come back. A car cleaning chemical manufacturer will routinely accept these changes without changing their own prices, understanding that they will gain it back when the price decreases. It is decidedly rare for such manufacturers of bulk car wash chemicals to raise and lower prices on a whim – they are slow to respond but the rises tend to be permanent. It is really only now that we are accepting that there is no end in sight and prices are not going to go down. The brand owners who buy bulk car wash chemicals will increasingly see the impact of this with rises in the past and coming few months.
What can we do to help mitigate these issues?
It is imperative to provide your supplier with forecasts of your requirements such that the manufacturers of your car wash detailing supplies can attempt to hold suitable stock to try to see off the most extreme rises. It is also important to be mindful of some particularly difficult products. These will typically be the most commodity type products. For instance, Traffic Film Removers (TFR) are low (ish) cost products with lower margins. With the issues in supply from China, where many of the lower cost sequestrants – critical to these products – are sourced, this mainstay of valeting products is severely troubled. Another major difficulty is with the silicone market. Silicones are presently ‘Force Majeur’ with the majority of global manufacturers. They had reached peaks of approximately 3-4x their long term average prior to this extreme status which, to an approximation, means that they are simply unavailable unless your have major commercial buying power. Why does that matter? Simple – almost every last Tyre and Trim Dressing is dependent upon them. There are precious few alternatives and many of those are, again, multiples of the price. It has become a time to take what you can get, because the chances of getting what you want are so slim.
What is the outlook?
Honestly, we do no know. We are shocked that this has gone on as long as it has and, for the time being, our hope is for a stop to the rises with limited hope for decreases in the short term. We find it to be unlikely that we will see major improvements for several months with our best guess being that we will need to see Q2-3, 2022, before operating conditions become any less difficult.back to blog