Dear customers & partners,
The pandemic is still a reality we all have to deal with on a daily basis. In several regions in the world, a third wave has been identified and societies are trying to contain the spread of the virus and prevent deaths through strict measures. At the same time, the vaccination program is rolled out in several regions which has started to show a positive effect. It makes me realize how vulnerable we still are and how important it is to work on a more sustainable world.
It also makes me realize that companies have a responsibility to contribute to creating a more sustainable world. It strengthens us in the Jacobi vision and our ambition to become the most sustainable supplier in the industry.
Sustainability starts with health and safety of our people. I am very proud to see the picture below with the Indian production team taking a pledge on safety at the occasion of the National Safety Day on March 4!
In the Philippines, we are organizing a special training program on fire safety this month. See picture below.
Another important element of our sustainability program and an overriding objective is to secure supply to our customers. We have developed a ‘Business Continuity Plan’ describing how we secure supply in case of unexpected events in our plants. Security of supply comes at a cost.
Although our production teams are doing a fantastic job keeping up with production, we still face a disturbing situation in ocean freight which is out of our hands and jeopardizes our supply promise to our customers. Please find below our bi-weekly update.
The slow turnaround and return of empty containers, resulting mainly from COVID-19 factors in the main export areas of Europe and North America, continues to cause a global shortage of containers. Against that background, China has prioritized pulling containers into China following their New Year Holiday which has resulted in an increased reduction of containers for use by other Asian countries. Together with reduced vessel space being available, this is adding delays to our shipments from India, the Philippines and Sri Lanka.
The other major factors prolonging the global ocean freight disruption are:
- Shipping lines have cut back sailings on some routes because of congestion at the destination port, especially USA west coast, UK and Australia and reduced capacity on vessels to allow more space for empty containers to be moved and repositioned for reuse.
- On other routes they are adding more stop-off points so further extending the overall transit time
- Transshipment onto another vessel at many of those intermediate ports are also suffering hold ups because of lack of connecting vessels
- Last minute diversions are occurring because of final destination port congestion, adding further delay
No improvement is expected until the shipping lines are able to solve the container shortage problem which is very complex and will take some time to regularise.
Below is the update of the matrix showing the scale of delay risk on the various regional routes from our Asian plants. The main change from the last report is added time from Sri Lanka to N America.
Delays must continue to be expected on all shipments, with overall transit times being extended by the cumulative delays in finding empty containers and/or vessel space, hold-ups in transshipment and slower handling at some receiving ports.
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. The global supply chain team will work in a close team effort 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 in USD from Q3 2020 (reference point) to March 2021, the following table shows the average USD increases on the main routes from Asia to the destination regions. The main changes since the last update are further cost increases from India to Europe, N America and Australia, and from the Philippines and Sri Lanka to Europe. There has been a small decrease in cost from China to the main Europe destinations.
Overall, since the ocean freight disruption started to hit costs back in August / September 2020, the largest USD cost increases have been to Europe from China, Vietnam and the Philippines.
To give an indication of the current trend in cost, the following table shows the direction of cost: up, down or unchanged, expected to be experienced in the next 2 weeks:
Thanks you for your support and cooperation.
Stay safe, stay strong.
Remko Goudappel CEO