Clogged Ports Are Pushing Up Costs, Cardinal Health CEO Says

(Bloomberg) -- Cardinal Health Inc. is seeing congested ports and pricier commodities drive up the cost of manufacturing and distributing medical supplies such as gloves and syringes.  

Container costs spiked ten times and commodity prices doubled from prepandemic levels during the drug distributor’s fiscal-first quarter, which ended Sept. 30, Chief Executive Officer Mike Kaufmann said in an interview Tuesday. 

International freight posed a major headache, Kaufman said, with the company’s shipping partners reporting packed ports and too few people to work through backlogs. 

Cardinal anticipates added supply-chain costs of $100 million to $125 million during fiscal-year 2022. The company had thought the issues would start to resolve sometime this year. Now, it doesn’t expect they’ll subside in the period, Kaufmann said. 

“We do truly believe they’re temporary, that they will come back down, it’s just really hard to project the timing of when they’ll come back down,” Kaufmann said.

Cardinal supplies medical products to U.S. hospitals and other health-care providers. While the supply-chain struggles are raising prices on items its customers need, they’re not resulting in shortages, Kaufmann said. 

Shares of Cardinal, which are down 7.7% for the year to date, slipped 0.4% to $49.42 at 12:26 p.m. in New York.

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