The global Coronavirus pandemic is continuing to impact supply chains across the globe, causing severe impacts to ink manufacturers. Freight availability has been greatly affected during the pandemic, and the resulting impact on the entire supply chain has been unprecedented.
Suppliers to the print industry have witnessed that the global ocean market has remained severely impacted by wide spread supply chain disruptions. All indexes on the sector are reporting week on week rate increases with new record highs been seen for many lanes during the past months.
These disruptions are as a result of operational capacity issues in a number of international ports. The combination of COVID outbreaks affecting port operations and general container shortages have resulted in extreme pressure to secure space on steam shipping lines.
Vijay Patel, Global Supply Chain Director – Flint CPS, stated that “at present, there is no evidence that the situation is going to stabilize any time soon. The demand of the steamship lines is on the rise as increased demand driven by economies opening and unprecedented money supply to various sectors last year created a perfect storm for the supply chain disruptions. While there is demand from the market and the willingness to pay there is no incentive for the carriers to ease the situation.”
For Flint CPS this has resulted in a direct impact on material supplies to Europe and North America from Asian markets. Patel continued that “to mitigate these impacts we have increased local stocks of key materials to gain some flexibility in supply from Asia. We are also working with logistics partners to ensure container availability and reviewing alternative materials from local markets to ease the burden on steam shipping requirements.”
Disruption to logistics is, regrettably, not only limited to ocean freight. During Q2 of 2021 the European road market was considered to be operating below capacity with ‘shortage’ being referenced in regards to various aspects of logistics activities. There has and continues to be a wide spread shortage of drivers and equipment directly impacting quality, supply and reliability.
Within Europe, Flint CPS continues to see a high spike in logistics demand; Q2 brought further challenges, as the demand continued to exceed the available transportation capacity.
Further recent high spikes on Brent Crude Oil and WTI market have created a negative impact on the general cost increase related to diesel surcharge. Both Brent and WTI moved on average up by around 20% vs end of Q1 2021, and 45% up vs end of 2020 levels. This trend is forecast to continue till end of the year.
North America anticipated imbalanced supply and demand which is expected to continue into early 2022, impacting services and availability. FTL supply driven by shortfalls in trucking jobs while demand for FTL’s forecasted to rise 6% – 8%. Strong imports and inventory replenishment activities will mean higher demand than historical levels of van and intermodal capacity.
Patel concluded that “the above issues also directly impact our suppliers supply chains, coupled with various market and material concerns, impacts their supply service and pricing. We have seen force majeure scenarios in a number of sectors and suppliers only willing to guarantee fixed proportions of their capacity. Global logistics, Crude and supply constraints and cost increases have all resulted in costs being passed throughout the supply chain.”
“We are anticipating the disruption and cost impacts to continue to at least the end of the year with further price increases to follow as a result.”