We recently discussed in our May Market Update that disruption in the global shipping network is causing extensive blowouts in lead-times. Let’s discuss that in more detail.
The pandemic has affected global supply chains in a range of ways.
On one hand the demand for goods worldwide had a sharp increase due to the boom of online shopping and global financial stimulus packages. On the other hand, with significant flight restrictions (implemented flight caps and reduction in flights worldwide) and lockdowns having significant impact on supply chains from farm to manufacture to transport hubs, moving goods around the world has become more difficult, and more expensive with a lot of the extra pressure falling onto the industry.
The increasing pressure on sea freight comes with it’s own challenges. We are experiencing regular -temporary- shutdowns or slowdowns of shipping ports across Asia, Europe and the Americas due to many factors. Including localised lockdowns and stop works due to COVID outbreaks, quickly creating a backlog of containers at the major ports. Extra contributing factors have also played part, such as the blockage of Suez Canal, and an uneven distribution of containers globally. Recent riots and strikes in Columbia and South Africa, important fruit processing countries, have accentuated issues from those origins. All of the above has added to the already existing pressures on the industry.
Shipping capacity to our part of the world has become more of a challenge and prices keep on increasing for both air and sea freight. Especially for specialised, less frequent journeys to our region of Australia and New Zealand. The up-and-coming peak shipping season in the lead up to Christmas will add extra load onto an already backlogged system.
One of our freight partners has recently shared their view on the outlook;
“With rates reaching record levels on all trades lanes around the globe, the Asia to USA and Asia to Europe trade lanes appear to be the benchmark now and at time of writing, there is every expectation that rates will continue to rise higher as capacity and equipment become more difficult to secure for our region.”NNR Global Logistics
Aside from the above supply chain challenges there is also very serious unfolding supply issues on a few key products, in particular raspberry and blackberry and to a lesser extent blackcurrant as well as stone fruit (peach and apricot) from Greece and Spain. It is very well possible there will be insufficient supply from the current crops to meet the market demand.
The good news
At Natural Ingredients our years of experience has built strong relationships with both our suppliers and freight forwarders. While this does not make us immune to the impacts on the global shipping situation, it helps us navigate and negotiate the very best outcomes for sourcing and transport of your required industrial fruits and vegetables.
We remain hopeful this situation will improve early 2022 but until then we expect a challenging period ahead. There are no signs yet we are over the worst of this situation.
Why do we want you to know this?
These delays and backlogs in shipping will impact directly on your business. A significant increase in costs on shipping and distribution of goods will impact on the landed cost of your most popular products. And serious delays in supply, making planning even more critical this year than ever before.
Particularly the up-and-coming Q3 and Q4 of 2021 are a concern that needs additional planning and forecasting to overcome these challenges. We have found that our regular order lead-times have doubled and, in some cases have extended out even longer.
These factors combined with the increased demand throughout the Christmas period, are going to cause significant pressure on already strained supply chains. Due to this, we encourage you to discuss with us your forecast demand for the remainder of 2021 and throughout 2022. Securing supply of products, freight and shipments early is key to delivering your products in the best time frame and in the quantity required.
Would you like to know more or like to talk to us about your supply needs? Contact us on 02 4573 2555 or by email at [email protected].