May 2021

Auto Glass Market Supply Chain Headwinds

The sporadic part shortages affecting the glass market has impacted the auto industry which are forecasted to continue through 2021 with signs of improvement only expected in Q1 of 2022. Some of the latest challenges include but are not limited to:

1) Disruption & high cost inflation in International Sea Freight & Logistics due to:
• Few containers available due to imbalance of trade (eg: US imports 100 containers but only exports 40).
• Increasing Prices (May 2021 World Container Index at $5,000 v $1,500 LY) with today’s market at $11,000 per container (>700% increase vs 2020)
• Port Congestion caused by Covid, Container shortage, Strikes and Suez Canal incident
• Shipping Companies being very selective with who they serve. Quotas allocated to shipping lane (ie: max 5 containers per week to Canada) and price at ‘Spot Buy’ rather than Contracted Rate.
• Poor Ocean Transit Reliability – with 6% cancelled.

2) Shortages/low stocks on PVB, Float and Components created by:
• Experiencing big, unpredictable demand swings post-Covid – plus issues described above meaning supply chains are not operating at usual lead-times.
• Texas extreme cold weather causing global plastic shortage.
• Declaration of “Force Majeure” from Eastman (Global PVB supplier) that have impacted mainly Pilkington and Vitro, causing knock-on effects to other suppliers.
• Pressure on Float glass due to high demand for Architectural Glass as building sector booms (More profitable than Automotive glass).
• Disruption in suppliers’ supply chains for components (like ADAS brackets) due to manufacturers bankruptcy (Spanish supplier close-down impacted Shatterprufe and AGC).