Dear customers & partners,
Port congestions causing shipping delays and longer transit times adding to the logistics disruptions!
Since the last update 2 weeks ago, there has been a small improvement in making shipments out of India and Sri Lanka to North America but big delays continue and are made worse by inland haulage delays from receiving ports to our warehouses. Shipments from the Philippines to all destinations remain very restricted. We are now also experiencing more delay from Sri Lanka to Europe.
Please find below the delay risk table by origin/destination region which shows no significant change, with the most severe delays still being on routes to North and South America, Africa and Australia.
The continuing big delays in shipping out from our coconut factories are resulting in an ongoing very high level of finished goods accumulating, and in some locations storage space is not enough. With limited shipping spaces available, it is important that priority is given to the most critical orders – our global supply chain team is working to achieve that in coordination with regional supply chain teams and the Asia logistics teams which are doing an excellent job in such challenging conditions.
The overall situation will only improve when global shipping demand drops or shipping capabilities (containers and vessels) increase. It is very difficult to predict when this will happen or in what form and when a new normal will arrive, but it is looking likely that we can expect these problems to continue through 2022. These links gives more background to the situation with interesting comments from Maersk CEO, Maersk being the most reliable but also the most expensive line currently!:
To illustrate the scale of the cost-uplift in USD for Jacobi from Q3 2020 (reference point) to November 2021, the following table shows the average USD increases on the main routes from Asia to the destination regions. The only significant cost change since the last update 2 weeks ago is an increase from India to Europe with a small reduction from India to North America, although rates remain very high.
Until August, the largest increases since Q3 2020, both in USD and % terms, were mainly on routes to Europe, especially from China, the Philippines and Vietnam but since August routes from India and Sri Lanka have suffered a very sharp and high rate of increase. The largest of these on average are equivalent to an additional freight cost of approx. $700 per MT. Inland haulage rates are now also increasing significantly, especially in the USA, which is adding even more to the increase in overall freight cost to final inland destinations.
Most routes continue to have an increasing cost trend. There is small reduction in costs from China to Europe and North America. The predicted forward trends are shown best in this heatmap format:
- Vaccination is progressing very well at all our plants: a second vaccine dose has been received by 50% of our Vietnamese team, over 80% of our Indian team, and over 90% of our team in The Philippines. As previously reported, we are at nearly 100% in Sri Lanka and China. The graphs below show vaccination progress in Asian countries since January:
- Charcoal supply is currently secured. However, availability has suddenly dropped in India due the authorities pushing charcoal producers to make their production process more sustainable. While we are fully supporting this process with technology development, this will continue to impact the supply of charcoal in the coming months.
- Travel between Asian countries remains mostly impossible except for a few selected routes that are slowly opening. It therefore remains practically impossible for our own people, all overseas suppliers of equipment and contractors to travel to our sites. This causes delays and continued challenges for our expansions and new capability developments. Still, all projects are moving forward thanks to great teamwork and dedication by our local teams.
- We realize that the pandemic has caused distress for many of us. Psychological counselling can help support our teams to deal with the additional stress caused by these circumstances cause. In the picture, you see a counselling event for all our team members in India which was highly appreciated.
- Our operations in Europe and the US are also running at full capacity.
- We continue to apply strict health and safety policies at all our sites, despite the improvement of the Covid situation and the relaxing of rules in most countries. This is needed to be able to continue operating safely when Covid cases appear. Consequently, visits to our sites are still only allowed for essential purposes.
Activated Carbon (AC) sourced in China
The situation China is very dynamic. This justifies an update:
- Thermal coal prices in China have stabilized at an extremely high level due to government intervention.
- This now allows us to provide 1 month validity on price quotations of most standard grades. • Many Datong producers (of direct activated GAC) may be forced to shut down their facilities during Q1 due to the Olympics. Therefore, we expect Q1 supply to be limited and Q2 prices to remain high. Hopefully, Q3 2022 will start to show improvements.
- The cost of chemical wood-based carbon (linked to that of phosphoric acid) is now less volatile but remains at a high level.
As long as the situation in the world continues to be volatile as a result of the pandemic, I will continue informing you about the situation and the way Jacobi deals with it. As the situation has slightly eased this past week, the next update will be in 2 weeks. We continue working towards our vision of becoming the most sustainable supplier to the industry and secure supply the best way we can.
Chief Executive Officer