Covid-19 and the effect on feedstock prices and sea freight rates
We are not only facing unusual times due to Covid-19, but also see that it starts to influence our business. In some feedstock indicators, such as non-ferrous metals or polymer, there is a strong increase due to market demand versus availability. One of the key factors is the strong rebound effect of the business in Asia exceeding 2019 figures by average 6-7%. We clearly see that covid-19 has a strong effect on feedstock prices and sea freight rates.
The last couple of months we see strong developments on (sea) freight notations due to a shortage on ship space and imbalance on equipment (containers). This lead to a strong increase at record breaking heights which hasn’t been seen for more than a decade.
In December, we expected the sea freight rates to ease by the end January. Because Asia would prepare for the celebration of the Chinese New Year. However, there still is an imbalance on equipment, failing synchronizing container demand versus availability. Supply chain system problems with ocean and/or feeder vessels are to be well connected. This results in delays in the delivery.
HEC-Holland is doing the very best to make sure the market demands cover your production requirements. Nevertheless, at this stage we cannot predict how prices and rates will develop in the future. It will certainly be a dynamic half year. We will stay in contact with you on how we can assist you in any way. At this moment we are unfortunately forced, due to the unstable market conditions, to call for a “Freight Adjustment Surcharge”. All depending on the type of product. We will do our best to minimize costs and prices for you.
For more information, please contact your account manager. They can tell you how we can secure our joint business and how it might effect the commercial conditions. Of course, we try to minimize costs. We do have to be realistic under the present circumstances which count for all parties.