March 21, 2022 – In the medical products and equipment industry, three factors will contribute the most to inflation in 2022, Margaret Steele, senior vice president of med/surg for Vizient told Repertoire for its March 2022 cover story: rising labor costs, transportation costs and raw materials. “However, labor costs will likely have the most long-term impact as this metric doesn’t typically decline unless new technology is introduced to create more efficiencies in the manual labor aspect of production.”
When it comes to supply chain costs, as of mid-January, global logistics remained “an overloaded and stressed combination of port congestion, vessel shortages, equipment and container shortages,” says Anders. Not surprisingly, the cost of land, air and water transportation increased to record or near-record levels. Lead times for the manufacturing of additional cargo ships, shipping containers and freight trucks were also significant.
Although shipping container availability has improved slightly, costs remain at record levels, she says. Compared to prices in March 2019, freight rates from China to the U.S. increased 500 percent with spot rates up to about $10,000 per container, compared with the more typical price of $1,200. In addition, the pandemic and other restrictions have limited the availability of dockworkers and truck drivers, causing delays in cargo handling after it arrives at ports, she says. “There’s no clear consensus on how long this situation will last, with some experts assuming that these logistical challenges will remain for the foreseeable future.”
Read more in the latest issue of Repertoire.