As we enter the fourth quarter of 2021, we want to make you aware of disruptions in global production and distribution chains that will have substantial impacts on green industry businesses in 2022.
Global Port Congestion
Key container ports around the world remain logjammed due to inclement weather, COVID-19 outbreaks, a shortage of shipping containers, and a labor shortage in most Western countries. Ocean freight costs have increased five to six times their pre-COVID levels. Trucking shortages are adding to congestion and delaying the flow of containers from port cities.
China Energy Crisis
Surging coal prices and fossil fuel consumption limits have led to an electricity shortage in 20 of the 23 provinces in China. The government is rationing electricity, and sporadic manufacturing stoppages have further complicated the global supply of agrochemicals. Restrictions on fertilizer exports began on October 15th due to the energy-intense production process, and yellow phosphorous production has been reduced by as much as 90% from prior months. Energy demand of China and Europe has led to skyrocketing natural gas prices globally.
Freight Market Update:
Domestically, national averages for truckload freight continue to reach or exceed all-time highs. Fuel increases are expected to continue increasing overall freight costs in 2022. Continued driver shortage has resulted in ongoing wage increases and recruitment bonuses. New and used truck markets are very limited. Lead times for new vehicles are approximately 18 months.
Chemical Supply/Price Update:
Chemical prices are expected to continue climbing during 2022 due to record demand, production curtailments, and the increased cost of logistics. Active ingredients with ongoing supply challenges include: glyphosate, glufosinate, 2,4-D, dicamba, MCPA, imidacloprid, bifenthrin, lambda-cyhalothrin, azoxystrobin, propiconazole, and tebuconazole.
Fertilizer Supply/Price Update:
Urea prices have increased by 200% since October of 2020. Chinese export restrictions, European production shutdowns due to high natural gas costs, and strong demand at the farmgate indicate that prices will remain high into 2022. DAP/MAP have increased by 90% since October of 2020. China accounts for roughly 1/3 of global phosphate exports. Without Chinese participation, prices are expected to remain elevated. Potash has increased by 200% since October of 2020.
Director of Supply Chain