Supply Chain Challenges – for October 2021 Price Review
22nd Oct 2021
Dear Client,
As you would be aware, the global circumstances since February 2020 have had a significant impact on the global supply chain; shipping costs have increased at an unprecedented rate, lead times have stretched significantly, many raw materials are in short supply (and therefore subject to price increases on the basis of supply & demand), and currency exchange rates have fluctuated significantly. These factors flow through and affect the cost of all our imported products, as well as many of those made in Australia, as these locally made products often rely on imported inputs, or raw materials that are based on global pricing.
The graph below shows the cost of moving a 40’ shipping container over the last 2 years, with increases of over 550% during this time, most of this increase occurring in the last 6 months.
While unpredictable at the best of times, exchange rates have been extra difficult to predict during the challenges of Covid, and after seeing some recovery earlier in 2021, there has been a steady drift back down since June 2021 as shown on the chart below.
To explain the effect of this, in June 2021 with an exchange rate of 0.77, 1 US dollar cost A$1.30, and now in October at 0.735, 1 US dollar cost A$1.36 – so nearly a 5% increase in 4 months just on the cost of currency alone.
As an example, one of our key products is coir growing media products (Cocopeat, Cocochip, Cocoblend), and the points below give a summary of the supply and price issues we have faced with these products.
- Raw Material cost Feb 2020-Sep 2021, increase of 40%
- Shipping cost Feb 2020-Sep 2021, increase of 550%
- A shortage of shipping containers resulting in delays of 4-6 weeks from when product is ready to when it can be shipped.
- Covid restrictions in India meant there were severe limitations on staff numbers at production sites over the last 18 months
- And as with every other year, the summer monsoon from June to September and the winter monsoon from October to January has a significant impact on production volumes as all product is ‘sun dried’ in external drying yards.
As a result of the combination of these factors, the landed cost of our coir products has doubled in the last 2 years.
As you would appreciate, with so many commodities affected, and each arriving shipment being different to the last, it has been a considerable challenge to keep track of costings. Here at Fernland we always strive to provide our clients with exceptional value, and any price changes we make are based on the necessity to maintain a viable business that can effectively provide our clients with the products they require to run their own enterprises.
Over the last few months, since we released our 2021 Trade Catalogue & Price List, we have had to adjust many prices, and while we expect this will be an ongoing necessity, we thought it timely to provide you with an updated ‘soft copy’ of the 2021 Trade Catalogue & Price List – but please be mindful that we expect further changes in coming months.
The best way to find your current pricing is via our website at www.fernland.com.au; once you login on the Fernland website you will have access to your specific pricing that is updated every day. (If you need help in setting up a website login, please send us an email to sales@fernland.com.au and we can get you set up very quickly).
Our sales team is here to help you; if you require any assistance with product selection or price confirmation, please don’t hesitate to contact us.
Email: sales@fernland.com.au | Phone:
Yours sincerely,
The Fernland Management Team