Circumvent Polyethylene Supply Disruption with Strategic Suppliers

Circumvent Polyethylene Supply Disruption with Strategic Suppliers

Supply chain disruptions happen. One of the most common reasons is due to weather issues affecting the many plants in the southern region of the US. Weather delays cause a ripple effect on supply chains, impacting rail routes and causing congestion that forces converters to call for trucks hundreds of miles away to get contracted resin supply. This long trip not only costs converters unplanned expenses but it also can delay their production, which further deducts from the bottom line.

Shell Polymers spent over 1,000 hours interviewing converters to gain an in-depth understanding of common challenges so we could address them in the construction of our new plant. As a result, our plant and supply chain operations are specifically designed to help converters mitigate supply disruptions as much as possible in the current environment.

Increase Reliability During Uncertain Times With Shell Polymers

During hurricane season, the polyethylene market will see rail delays from the Gulf Coast. This leaves producers reliant on supply already in SIT yards to fulfill contractual obligations. With our supply strategically located in the northeast, we will be able to respond quickly to market shortages with our ability to load trucks directly onsite. This also means converters don't have to worry about storing resin for adverse events and can focus on growing their business.

Having both truck and rail, or multi-modal, transport options is another way to give customers supply security because we have multiple options for when customers need it. Multi-modal transportation provides various reliability, capacity, and safety advantages because converters benefit from more equipment and standardized schedules.1 Shell Polymers’ real-time tracking capabilities allow us to proactively monitor for transit issues and send trucks to fix or take over for malfunctioning rail cars, and vice versa.

Reliability and availability are critical and essential to customer satisfaction and competitiveness. To that end, we are implementing GPS tracking on all of our railcars so customers can easily track their shipments via the Customer Hub. This will help customers see exactly where their shipments are located, when they’ll arrive, and if there are any issues they should be aware of. This kind of transparency will help clear up communications, a common issue we hear from converters. 

Proactive Suppliers Help Converters Navigate Market Challenges

With hurricane season annually approaching, converters are frequently forced to change their buying patterns and incur extra inventory cost or pay a premium to prepare for weather events. Based on the economic impact of the global pandemic and other events in 2020 and 2021, this means that converters can end up buying resin at higher prices.

It’s common knowledge that resin prices can change based on factors such as:

• economic conditions
• weather impacts on feedstock, supply chains, and resin production plants
• demand for end use products
• unplanned production delays.

While fluctuations in resin prices aren’t necessarily a foreign concept to converters, recent years has been exceptionally difficult. Plastics News reported never-before-seen resin prices across raw materials including polyethylene, polystyrene, polypropylene, and polyvinyl chloride in 2021. These numbers continued to climb as demand skyrocketed while resin producers struggled to recover from Winter Storm Uri. For example, in the PE market, resin prices at one point in 2021 were up a total of 28 cents from the start of the year and were up 48 cents since January 2020.3 With the past couple of years being a rollercoaster across many industries, it’s no surprise that resin prices have been on a similarly bumpy ride.

Having a strategic supply option can help mitigate such issues and provide choices in when and where to buy. As a greenfield organization, we strategically built our teams and polyethylene plant to be your long-term polyethylene supplier. By proactively staying ahead of unplanned circumstances and market shifts, we put in the work to ensure you have confidence in your polyethylene supply.