This week’s communication focuses on Ocean Freight again. Fortunately, our manufacturing plants are still operating at full production and are producing as per our order confirmations. However, the ability to ship product on time has been an on-going issue which is becoming more challenging every week. These challenges impact both promised delivery dates and the cost of shipping. The below communication describes the situation transparently, shows the consequences and shares the way the Jacobi team deals with it on a daily basis to serve you best.
Expected Delays for Deliveries
Below is the weekly update of the matrix showing the scale of delay-risks on the various regional routes from our factories in Asia:
It is important to realise that ALL major Ocean Freight routes now have medium to severe delays. Three routes which had short delays last week, now have medium delays and several medium delays have moved to severe.
As mentioned last week, the shipping situation has got worse and now 100% of our major shipping routes are impacted by medium to severe delays. It is important to restate the reasons for these delays:
- Continued congestion in ports, caused by mainly COVID19 related labor shortages
- There is a shortage of containers in China and generally worldwide because of the disruption and imbalance in world trade, causing the shipping lines to reduce capacity on vessels to allow more space for empty containers to be moved and repositioned to where they are needed for reuse.
- Routes with stop-offs to tranship onto another vessel suffer further delays because of problems at
the intermediate ports
- Routes with stop-offs to tranship onto another vessel are suffering further delays because of problems at the intermediate ports
- Last minute ocean carrier diversions due to destination port congestion.
- Ports are restricting dates they will accept cargo during the Christmas/New Year holiday season.
No improvement is expected for several months and the situation could even worsen especially for shipments from China as the Chinese New Year approaches. Delays must be expected on all shipments.
Please check for current best advice of the possible impact on any open orders with critical timing and anticipate delays and longer transit times when making future orders. Our Global Supply Chain is working closely with
our sales and customer service teams to ensure your orders are prioritised and we effectively utilise available vessel space in order to minimise delivery delays.
Increase in Cost of Shipping
Shipping costs continue to rise. 18 to 42 major shipping routes reported in the table below show cost increases compared to last week. This trend is reflected in all routes. The table provides a quick reference of the average percent increase in the cost of ocean freight from Q3 to December 2020 on >400 routes used by Jacobi to ship product from Asia. Cost changes for routes not shown in the table can be provided on request.
We are expecting further increases in the weeks to come as shipping lines are raising prices on more routes where they have to cut back sailings because of continued congestion at the destination port. In addition to these higher shipping rates, shipping lines are also adding a Peak Season/Exceptional Surcharges for example on the China-to- Europe route starting December 15 of USD 800/1,600 per 20’/40’ container.
Costs for December are included as the latest now being quoted by shipping lines – these will continuously change – revised tables will be issued weekly. More detailed information on individual routes can be provided on request.
Due to the extreme situation in Ocean Freight, the additional freight costs have been passed along on all orders starting back on December 1, 2020. The additional freight costs reflect the real increases. We had been absorbing very high costs from the start of Q3, but we no longer can. We highly appreciate your support going forward until the situation “normalises”.
It takes a very close X-functional team effort between you, our Sales, Customer Service, Logistics and Supply Chain teams (both regional and global). We will do all in our power to get through the coming period and serve you in the best way possible!
Thank you for your continued support!
Stay safe and take good care,
Remko Goudappel CEO
Jacobi Carbons AB