This week’s communication is different from the ones before. As communicated in the past 4 weeks, the biggest challenge we face is the global disruption to Ocean Freight. We were hoping that the situation would improve over time, but unfortunately the situation is getting worse and is not expected to improve any time soon. As our manufacturing plants are running full, this communication focuses on how to deal with the extreme situation in Ocean Freight.
Below is the weekly update of the matrix showing the scale of risks of delays and cost increases on the various regional routes from our Asia factories – the cost scale has been changed due to the continuing large increases, with some routes’ cost more than doubled:
Major ocean freight difficulties continue with no sign of improvement and are worsening on some routes. Increasing port congestion in many places caused by mainly COVID19 related labor shortages is one of the main factors, together with big difficulties in repositioning empty containers. The main points are:
- Continuing upward cost trend on most routes, with China adding a Peak Season Surcharge of USD 500 per container from December
- Shipping lines are raising prices even more on routes where they are having to cut back sailings because of congestion at the destination port, for example Felixstowe in the UK
- Ongoing difficulties and delays in shipping from India and the Philippines to North America, particularly US West Coast, and Australia, and now also Europe
- Routes with stop-offs to tranship onto another vessel are suffering further delays because of problems at the intermediate ports
- Last minute diversions are occurring because of destination port congestion, adding further delay – for example some vessels bound for Felixstowe, UK could not be handled there and so were diverted to Antwerp
- Approaching Christmas/New Year period will also restrict dates when ports will accept cargo, adding to timing delays
- No improvement is expected for some months, with Chinese New Year holiday likely to cause more disruption in Q1 2021
As delays are expected on all shipments, please check for current best advice of possible impact on any open orders with critical timing and anticipate delays and longer transit times when making future orders. Global Supply Chain will work with the sales regions to make sure that all available vessel space is prioritised to the most time critical and important orders.
To illustrate the scale of the cost uplift since Q3 in USD compared to the average cost per container in 2019 and each quarter in 2020, below are charts showing the trend for the main routes used for each sales region (this is a sample of the > 400 routes used by Jacobi in shipping from Asia).
[CN is China, PH is the Philippines, SL is Sri Lanka, VN is Vietnam, IN is India]
Due to the extreme situation, we are forced to charge you for the additional freight costs with immediate effect as of December 1, 2020. We’ll do it in a transparent way based on real cost increases. We have been absorbing the additional costs from the start of Q3 and highly appreciate your support going forward until the situation “normalizes”.
Thank you for your continued support!
Stay safe and take good care,
Remko Goudappel CEO
Jacobi Carbons AB