Tag: supply chain

  • Vapor Supply Chain Slows

    Vapor Supply Chain Slows

    Photo: Timothy S. Donahue
    Covid-19 has disrupted the vapor product supply chain.

    By Michael MacGrady

    The global economy is reeling as industries in virtually every field are suffering the challenges brought on by the unprecedented outbreak of the novel coronavirus and the spread of Covid-19. According to a report published by ECigIntelligence.com in February 2020, manufacturers of vapor products and components are relying on reduced workforces and coping with product shortages, which in turn is affecting product accessibility around the world.

    Shenzhen, China, is the manufacturing capital for the international e-cigarette industry. At press time, Covid-19 cases worldwide nearly topped 719,000, according to the World Health Organization (WHO). Alarmingly, the number of deaths has exceeded 33,000, with the outbreak epicenters moving westward to Europe, Latin America and North America.

    Also, at the time of writing, data from China revealed a slowing of deaths and new cases as the metropolises of Wuhan, Guangzhou, Hong Kong, Shanghai and Shenzhen slowly resumed manufacturing in what seems to be an entirely new world for international commerce. However, even then, these cities were shadows of their previous selves as bustling centers of industry and commerce.

    Photo: Timothy S. Donahue

    “Workers are slowly returning, but the situation remains literally unchanged,” said Dimitris Agrafiotis, executive director of the Tennessee Smoke Free Association and the chief executive of Global eVapor Consulting. According to Agrafiotis, the international vapor industry is now in a bind that cannot be dealt with in the same way as a regulatory challenge or a change in the international market.

    “There is not enough staff to get production lines up to speed, and the limited workforce is trying to catch up to back orders, especially for consumables like coils and pods,” Agrafiotis said, adding that the industry will remain in dire straits, facing considerable challenges such as the looming compliance deadlines in the United States.

    “Currently, most factories are operating well below 10 percent of their usual capacity,” said Agrafiotis. According to him, China’s central government has done what it can to control the spread of the new virus in a heavily concentrated industry city like Shenzhen.

    One of the biggest challenges will be to restaff the factories that feed the international demand for e-cigarettes and their components. Workers at these plants, Agrafiotis added, migrate from remote villages to work in Shenzhen and make a living in high-tech manufacturing. That is one of the most efficient ways to transmit the coronavirus, according to Agrafiotis. The lockdown of Chinese citizens, along with restrictions on nonessential employees, has indefinitely upended the migratory flow of workers to manufacturing hubs such as Shenzhen.

    Pandemics are inherently disruptive. Analyzing a model global influenza pandemic, researchers from the London School of Hygiene and Tropical Medicine, the University of Antwerp and Oxford Brookes University predicted that an international pandemic could result in extensive unemployment, thus impacting production and consumption.

    Photo: Timothy S. Donahue

    Covid-19 is no different, once you consider the events of forced business closures and modified operations. Virtually all countries have implemented policies to prevent a spread of the virus. U.S. state governments are issuing shelter-in-place orders for citizens in highly populated areas while also placing restrictions on the number of employees allowed in an office at a time. Needless to say, such policies stunt labor activity.

    The restrictions in China go even further. “My sources in China have told [me] they do not anticipate things to return to normal until mid to late June, causing a huge disruption in the chain of products and release of new technology,” said Agrafiotis.

    The outbreak comes at a time of already tense relations between the world’s largest manufacturer of vapor products, China, and the largest consumer of e-cigarettes, the U.S. Rather than cooperating in the coronavirus crisis, the two superpowers have unhelpfully been blaming each other for the outbreak.

    Doug Barry, a spokesperson for the U.S.-China Business Council, believes that this is a critical period for the bilateral trade relationship. “The most optimistic report is that the epidemic will knock about 1 percent off of GDP for 2020,” he said. “U.S. companies with operations in China are likely to see lower revenue for the year.” Encouragingly, however, Barry said the council had seen no evidence of a rush for the exits by U.S. and other foreign companies.

    “Our members are in China for the long term and see it as a strong market going forward,” said Barry. “That said, some companies are prudent to look at some diversification in their supply chains, but China’s role as a key player is unlikely to change because of the emergence of this new virus.”

  • Vape Shops Dealing With Supply Shortages

    Vape Shops Dealing With Supply Shortages

    Photo courtesy of Felecia Boggess
    U.S. vape shops have been hit hard by the coronavirus pandemic as supply chains dwindle and consumers become concerned.

    By John Castle

    The coronavirus pandemic has wreaked havoc on industries from travel to entertainment to hospitality, and the vapor industry has not been spared. Since the first international cases of Covid-19—the disease caused by the severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) and that first appeared in patients in late 2019—businesses have faced delays and temporary closures as the virus spread from Wuhan, China, to the rest of the world.

    In response to the pandemic, both government and market forces have been locked down tight to prevent further spread of the virus. Public venues have suspended operations, and some have closed entirely until further notice. Major sporting events such as the Tokyo Olympic Games have been postponed until 2021. In the U.S., Major League Baseball may see a season opener much later than normal—if at all—this year. Across the globe, professional football, basketball and hockey leagues may also have to cancel their 2020 seasons. Live concerts are banned. Bars and restaurants are only allowed to have takeout and delivery or are shuttered entirely.

    Factories are shuttered as well or in some cases remain open but have been repurposed to manufacture N95 filtration masks and/or ventilators. In Shenzhen, China, many factories remain closed or are producing at less than 100 percent. Some factories have even reportedly moved away from producing vapor products (such as mods, sub-ohm tanks, rebuildable dripping atomizers, rebuildable tank atomizers and atomizer coil heads) to manufacture the much-needed safety supplies for health workers and those infected with the disease.

    Some e-liquid makers have changed course too and are now manufacturing hand sanitizer since propylene glycol and vegetable glycerin can be used to produce hand sanitizer as easily as they can be used to produce e-liquid.

    The vapor industry is struggling, according to experts. Covid-19 and its effects in the form of government lockdowns as well as manufacturers either temporarily repurposing their production lines or shutting down entirely has resulted in a marked—and in some cases extreme—shortage of the products distributors, retailers and consumers rely on to sustain their vapor businesses.

    U.S. vape shops have been hit hard by the pandemic. Supply chains are dwindling. Consumers are worried too. “I’m in West Texas. Only the supply has been affected so far,” said vaper Rick Martinez. Vape shops share those concerns. Vape shop owner Deidra Renee Casey responded, “The only trouble I’ve had is getting my products in.”

    “So far, for us, [the problem] is just getting supplies we need, such as coils, mods, tanks and kits,” said Tiffany Smith, owner of 180 Vapors in Sandwich, Illinois. Charlene Fuller, who owns Upstate New York Vapes in Queensbury, New York, said, “No staff are sick, but I have informed them if they get sick and have a fever to stay home (with pay) and call their doc. [We] also amped up cleaning procedures. Sales are steady, but inventory for some things are dwindling.”

    David Cervone, owner of The Vapor Lounge Rhode Island (TVLRI), reported, “We’re only having supply chain issues. Most people around us have been educated that the government overwhelmingly spreads misinformation, so they just stay clean and understand the stock issues.”

    Photo courtesy of Felecia Boggess

    Perhaps one of the darkest reports of what’s going on with vape shops comes from Felecia Boggess, manager of Mystix Vapes, based in Gillette, Wyoming. “This last month, our sales were booming from the ban on Juul and NJoy pods. It got to the point where we only had eight mods and some other products. We are able to get all the juice that we want but are unable to get any Falcon coils for the NJoy King … or the tanks themselves,” she wrote in an email. “As well as Caliburn Koko [pod] kits, Uwell tanks or coils and TFV … tanks or coils. Which, in my case, is awful because there goes almost half of my sales for the month.”

    The longer the pandemic drags on, the more severe the supply shortages are going to get, according to shop owners. Principally, this may be due in part to the large percentage of vapor products that are produced in Shenzhen, China.

    Boggess says that last month, Mystix sold close to 70 Uwell Caliburn kits and now has angry people coming in stating that the company sold them a product the consumer can no longer use since it’s hard for users to get any product, such as pods. “Something needs to happen,” she writes.

    The supply issues being suffered by vape shops could also prove to be a watershed opportunity for U.S. domestic manufacturers. As disheartening an episode as this is for American distributors and retailers, supply lines as fragile as the existing ones may not be trusted again so easily. Vape shop owners say someone is going to have to step into the gap and start producing more vapor products (such as mods, tanks and atomizer coils) domestically where the supply line is more robust and better protected.

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