Dear customers & partners,
The huge level of disruption to global ocean freight persists with continued shipping delays and extremely high costs. There are no significant changes from last week. Still, we’d like to share an update with you as we did not do it last week. Vessel capacity out of the Philippines is still very restricted and shipping from China will be interrupted by Chinese new year, being celebrated next week. North America, Australia and the UK continue to be the destinations in most difficulty. It is difficult to foresee any improvements until Q2 when ocean freight should have had time to start settling down again after the Chinese new year break.
Below is the 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 available vessel space, hold-ups in transshipments 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 cost-uplift from Q3 2020 (reference point) to the start of February 2021, the table below shows the scale of the % increase on the most used routes from Asia to the destination regions. Since the last time this table was shared, there have been some small cost reductions for routes from China and the Philippines to Europe, but overall rates still remain very high. Also, there have been some increases from Vietnam to Europe. The UK still stands out as the most expensive European destination.
Although it increases the freight cost per metric tonne, we are splitting some loads into 20’ containers to be shipped separately in order to reduce supply delays caused by the lack of 40’ containers.
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. Fortunately, our production capabilities are running at full capacity!
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!
At Jacobi, we started working on how to guide the company out of the crisis and into the future. Even though we are still dealing with the consequences of the pandemic on a daily basis, we do see light at the end of the tunnel as vaccination programs are being implemented across the world. We want to make sure that we’ll use the lessons learned from the pandemic and our Vision to become the most Sustainable supplier in the industry as the guiding principles to shape our future. We plan to keep you posted on the progress we make on our Journey. For this purpose, we’ll use the magazine ‘A Pure World’ as well, our new communication platform sharing the Jacobi story. The first edition is available now in print and online (https://www.jacobi.net/a-pure-world-1/). Please take a special interest in the article “Many vital paths towards sustainability” on page 16.
Our focus remains to become the most sustainable supplier to the Industry. As sustainability starts with safety, we continue prioritizing 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.
As we do not expect the ocean freight challenge to change significantly, we will move to bi-weekly communication. Of course in case of important changes to share, we will switch back to weekly updates immediately
Thanks you for your support and cooperation.
Stay safe, stay strong.
Remko Goudappel CEO