I started the year hopeful that 2022 would bring normalcy, with a return to travel, in-person meetings and conferences, abundant supply and lower feedstock costs. But so far, the Omicron variant of the COVID-19 virus has dampened our collective social progress, and many of our spirits, as well.
The silver lining that has given me a glimmer of hope came from the positive economic indicators of this new year. According to the survey of economic forecasters, growth in GDP in 2022 is projected at 4%, consumer spending at 3.7%, business investment at 5.6%, and consumer prices at 4.5%, with housing starts at 1.6 million units, light vehicle sales up by 0.8 million to 16.9 million, and unemployment sitting at a historic low of 3.7%. All these are signs of continued economic strength and strong demand.
While some improvement is seen in global logistics, constraints are expected to last until 2023 or potentially linger into 2024. Container vessels remain constrained, while port discharge timing raised to over 40 days at the Port of Long Beach (south of Los Angeles). Other ports also remain affected by the pandemic, coupled with additional closures driven by Mother Nature.
These setbacks cause railcars to remain stranded, waiting to be loaded and discharged. According to the American Trucking Association, the U.S. has a shortage of more than 80,000 truck drivers. To help alleviate the trucker shortage in the future, autonomous trucks are being tested. However, when this technology will be widely adopted is still largely unknown. To complicate matters, truck drivers crossing from the U.S. into Canada will be required to be vaccinated, causing additional delays in shipments to Canada.
With remote work options remaining widely used, the "great resignation" continues to impact many companies. Some businesses have not proven to adapt to the changing labor landscape and are struggling to find adequate workforce. This is predicated on the sales that these companies need in order to increase wages to hire more employees or provide staff retention incentives. Without the needed labor, these enterprises will be forced to reduce service or even close their doors.
To combat high inflation, the U.S. government anticipates rate increases this year, with the first increase expected in March. Federal Reserve Chair Jerome Powell plans to pivot away from loose monetary policy, with the goal of putting a lid on persistent inflation.
Most feedstock prices remain elevated, driven by the factors described above, as well as reduced availability and strong demand. These costs are forcing producers to raise prices for consumers, prompting inflation.
P&G Chemicals has proven a resilient partner over the past 24 months, keeping our customers’ needs top of mind, despite the challenges we all face. We have adjusted our product strategies to better protect supply for our customers’ growing demand with the quality, speed, and service that we are known for. We continue investing in our network – to provide improved capabilities, in our employees and supply partners, to delight our customers.
Cheers to a healthy, improved and productive 2022.