Dear customers and partners,
The overall Ocean Freight situation has remained difficult, leading to continued shipping delays and extremely high costs. There are few major changes from last week. Fortunately, the port congestion in Colombo continues to improve, reducing delays from Sri Lanka. This should also lead towards better transshipment times for shipments from India going through Colombo. Vessel capacity out of the Philippines remains restricted but there are first indications of a potential improvement in February. North Americas, Australia and UK continue to be the destinations in most difficulty. We are doing our utmost to supply our Customers on time and in full. Below is the weekly update of the matrix showing the scale of delay-risk on the various regional routes from our Asian plants:
Delays must be expected on all shipments, with overall transit times being extended by the cumulative delays in finding vessel space, hold-ups in transhipment and slower handling at receiving ports.
Please check for current best advice, as it relates to to the potential impact on any open orders with critical timing, and anticipate delays and longer transit times when placing future orders. Our Global Supply Chain team will work in a close team effort with the sales regions to make sure that all available vessel space is prioritized to the most time-critical orders.
To illustrate the percent cost uplift from Q3 2020 to January 2021, the following table shows the average increases (vs. Q3 2020 cost) on the main routes from Asia to the destination regions based on a sample of the most used routes from the > 400 routes used by Jacobi group in shipping from Asia. The main changes on the highest volume routes from last week are some cost reductions in routes from China and Sri Lanka to Europe but another increase from the Philippines to Europe, with the UK standing out as the most expensive European destination:
Although it increases the freight cost per Metric Tonne even further, to reduce supply delays caused by the lack of 40’ containers, we are splitting some loads into 20’ containers to be shipped separately.
Jacobi Group policy is to continue shipping to the greatest extent possible, using all available vessel space, despite these high costs, in order to secure Supply.
Freight costs will change continuously. In the table, most recent costs are included as quoted by shipping lines. Revised tables will be issued weekly. More detailed information on individual routes can be provided on request.
The Ocean Freight problems are expected to continue through Q1 and into Q2. For now, it remains impossible to forecast when normality will return. It will take a very close cross-functional team effort between you, our Sales, Customer Service, Logistics and Supply Chain teams (both regional and global) to get through the coming period. Let us communicate well, so that we may serve you in the best way possible!
In order to continue securing supply of our growing demand, we continuously innovate and expand our production capabilities. Major investments are planned for all product ranges in 2021, including kiln expansions in several countries in Asia, pellet production capabilities in India & Sri Lanka and Ion Exchange Resins produced in Finland. Several expansions have just been finalized such as (see pics from left to right): Impregnation capabilities in India, washing/drying capabilities in Sri Lanka and Resin & Carbon processing capabilities in China.
As we continue to deal with the consequences of the pandemic, our focus remains to become the most Sustainable Supplier in the Industry. We prioritize the Safety of our People. That is why we have decided to extend our travel policy (no travel unless absolutely necessary) during Q1 of 2021.
Thank you for your support and cooperation.
Stay safe, stay strong.
Remko Goudappel CEO