Industrial Suppliers Under Pressure As Coronavirus-Driven Demand Surges

Date: Friday, April 3, 2020
Source: The Wall Street Journal

Inventories at industrial wholesalers and suppliers are running low as police officers, delivery drivers and other ‘essential’ workers seek protective gear

Manufacturers and distributors of masks, gloves and sanitary supplies say they’re making difficult choices about where to ship limited inventories as unprecedented demand driven by the coronavirus pandemic overwhelms their supply chains.

Eric Cohen, vice president of supply chain at San Diego-based janitorial products distributor Waxie Sanitary Supply, said the company has had to fend off speculative buyers looking to buy large amounts of sanitary supplies. The company is limiting the flow of goods, he said, to “give at least everyone something” as demand has spiked in the past two months.

The company is among many trying to make sure municipalities, hospitals and schools get the products they need without emptying warehouses as shortages of personal protective equipment grow and replacement shipments are slow to arrive.

Demand is surging as police officers, cleaning crews, truck drivers, warehouse staffers, supermarket clerks and other workers in fields deemed essential join health-care workers in a search for limited stockpiles of protective gear.

Hospitals are running out of personal protective equipment, sometimes patching together their own makeshift supplies and relying on donations of respirators and other gear from businesses and individuals.

Traditional medical and industrial suppliers say their inventories are reaching their limits.

Hardware wholesaler True Value Co. is out of the N95 masks that offer the greatest protection from the virus and is encouraging stores it supplies to donate any that arrive in the coming weeks to local medical professionals, said Lyndsi Lee, the company’s senior vice president of supply chain.

“We have gloves that should be flowing in the next week,” she said. “Hopefully supply does not become more constrained.”

Johnstone Supply, a Portland, Ore.-based distributor of heating, ventilation and air-conditioning supplies, is also out of N95 masks. Chief Executive John Tisera said lead times from the company’s domestic suppliers have gone from a few weeks to 90 days, with similar waits for masks coming from alternative suppliers buying in Asia.

“I think those masks are going more to the first responders and the medical profession first,” Mr. Tisera said. “We’ll wait our turn.... When they’re back in stock, we’ll sell them to our contractors.”

Domestic manufacturers say they are ramping up production of protective gear, butdemand is outstripping capacity and trade figures suggest there isn’t much relief in the pipeline from overseas suppliers.

U.S. seaborne imports of protective masks fell 70.5% in the first three weeks of March compared with the previous year, according to Panjiva, the supply chain research unit of S&P Global Market Intelligence. Imports of gloves and protective eyewear fell by 54.9% and 45.2%, respectively. Panjiva said those declines may have come in part because shipments were diverted to faster airfreight delivery.

Some producers and distributors want the federal government to step in with direction on where to send products as hospitals and states compete for desperately needed supplies.

Mr. Cohen said the government acting as a central purchasing agent could help overcome basic hurdles in the industrial distribution channels. For instance, manufacturers that ship full truckloads of masks or gloves aren’t set up to take direct orders from end users such as hospitals, which typically rely on distributors to break up pallets of goods and handle last-mile delivery.

“I know that’s challenging for the government to do,” Mr. Cohen said. “But then you’re no longer competing with that distributor’s customers.”

For now, his company is holding back some inventory to ensure it has gloves, disinfectant and other sanitary goods on hand “for when school starts back up, or when hospitals need supplies.”

 
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