About PPE Explanation on Elevated Pricing

We are charging elevated pricing for inventory brought in from alternative channels since 3M has stopped releasing products regularly and we are receiving less than .01% of what we have on order with them. 3M has been prioritizing the needs of front line healthcare professionals and those that are vulnerable to this pandemic which we strongly agree. The reason for our elevated pricing is related to several factors and please read on if you have nothing to do:

1. Lack of export ban. While most countries such as Taiwan have acted very early to ban PPE exports, we have yet to institute one. We are still bleeding PPE products to the world. Although APD has been actively prohibiting any known attempt to export our PPE products out of US, the amount of inquiries we get on the daily basis for exportation is staggering. Draining away our already critically low national stock further drives the pricing of our current stock through the roof.

2. Policy inconsistencies in the US is another driver. Although CDC and various federal agencies have already cleared the use of industrial and expired respirators for use in this national emergency, these products are still blocked for importation at our border by US Custom requiring a FDA registration number. Only 2 or 3 3M respirators require such FDA registration out of 2 or 3 dozen models. All models are already being put into service currently in the medical field so keeping the door closed on products we are using anyway further restricts quantities available in the market and drive up pricing.

3. Global competition. Keep in mind that this pandemic is not just happening in the US. There is no place in the world right now where the PPE level is so comfortable no one worries about not having them. During the Chinese phase of the pandemic there was an astronomic loss of PPE to Asia. APD's strategy is not to compete with domestic sources for PPE products which results in zero net gain. We actively try to achieve a positive net gain to our national stock by pulling from international sources. We have called in as many past favors and incurred as many new debts as we can to pull PPE toward our direction. The global competition has intensified so much that market pricing has been driven up to a shocking level. At the time of this article on 3/24/2020 around 6 PM PST, through our global network we have learned that there are supposedly 200 Million pieces of 3M 1860 N95 in Japan, manufactured in Japan, that have surfaced on the global market. The asking price is USD$4.20/Each. Before the pandemic a box of 20 sells for about $13-$15 ($0.65-$0.75/each) on wholesale level. Last week it was 5 Million pieces in Canada for $5.25/Each. We don't know the true validity of these claims but those pricing are about right given what we have seen right now in the global market.

4. Increased Transportation Cost. Since world commerce has come to a sudden stop and countries are closing their borders and restricting travel, we have seen a plunge in available space on both commercial flights and cargo flights. What we used to be able to spend to airfreight something over now we can get about 30% of it for the same cost. Limited flights drive up costs as airlines now can charge whatever they want for freight and demand upfront payment thus hampering the free flow of goods.

5. Politician threats. Various AGs and other politicians have threatened legal action against "gouging" while not clearly defining what that means. If I used to buy a product for $1 and sell it for $2 and now I have to spend $3 for that product and sell it for $4, is that "gouging"? No one knows. We all know while federal, state, and local governments are pointing fingers at each other, it is the private sector that's in the best position to resolve this crisis. Instead of threatening the private sector, the government should open its doors wide open and let the private sector fully leverage relationships and know how through years and decades of experience and relationships. Scaring the private sector will only reduce the amount of goods coming through our borders. This is basic economics in our capitalism. If there are a lot of goods lying around, those people that are taking out bank loans and second mortgages will feel immediate pressure to drop price. Pricing will regulate itself instantaneously. Scaring the private sector into not acting will only worsen our problems and not lessen them.

6. The eBay and Amazon obstacle. Big internet e-commerce platforms such as eBay and Amazon; instead of stepping up to guide the correct flow of essential goods during a time of crisis they froze up and hid behind the "stop price gouging" moral high ground. For those companies like ours who really wanted to make a difference we started to restrict sales on eBay to front line healthcare professional only and ended up getting our accounts suspended because pricks wanting to hoard for doomsday complained about us while we were trying to focus on serving those who really need them in time of critical shortage. Instead of coming up with ways or programs to allow sellers to focus on fighting the pandemic with our front line healthcare professionals, they closed our account with a vague explanation about their "buyer experience". I don't think they know there is a global crisis right now but the result is kicking off many well-intended sellers from the platform while the guy not normally in the industry is still selling a piece of 3M 1860 for $59.99 on eBay. So now with increased marketing and order processing cost, we are yet again forced to increase our pricing in response just to survive.

Please send us any questions or comment via our TEXT support line. We are with you and we are working very hard trying to balance helping and surviving during this time of crisis.


James J Shih
President & General Manager