As we press on into 2021 with higher vaccination rates and, indeed, higher optimism, we continue to see fluctuations in the promotional products industry’s supply chain. These fluctuations are a direct result of recent shifts in supply and demand. This pattern will likely continue into the second and third quarters of 2021.
The product supply chain (from materials to manufacturing to suppliers) is out of balance, and we are all feeling the strain.
What does this mean for your brand?
In short, you can expect to see more price increases due to inflation. Increase in demand and shortness in supply (ie. material, labor, and fuel) lead to price increases. We’ve already seen price increases from various apparel brands and suppliers, and we anticipate similar increases for hard goods.
What’s all the hubbub about?
We’ve communicated with our trusted suppliers and have solicited helpful information regarding price increases, and we want to pass this knowledge on to you. The following are contributing factors to price increases:
- Cost of raw materials: Material prices, like most goods, are driven by supply and demand. Since the end of 2020, global demand has recovered nicely. Supplies, however, are still recovering.
- Higher exchange rates: The U.S. dollar has weakened against many global currencies. When the dollar weakens, overseas manufacturers are earning less in local terms than they did when the dollar was strong.
- Overseas shipping: The cost of shipping goods across the ocean has increased by 293% year‑over‑year.
- Increased tariffs: Tariffs impose a cost on all products that cross a border, raising prices within the country that imposes the tariff. Higher prices affect supplies as farmers respond by increasing output and affect demand as consumers buy less. Countries apply tariffs primarily to protect domestic industries.
What can you do?
We encourage clients and prospects to remain aware of potential price increases and to plan business accordingly. Plan any creative ideas around potential price increases. Consider a slightly more flexible budget.
Most importantly, stay optimistic. This, too, shall pass.
We are here to help keep you, your brand, and your business up to date and informed. Please know that our goal is to do everything we can to lessen the impact due to sudden changes within the supply chain.
Shine bright. Stay calm. Be Boundless.