As Pricing Stabilizes, Shipping Continues to be Thorn in Supply Chain’s Side
As organic coconut suppliers and manufacturers start to catch up with supply chain requirements, external logistics factors including further surges in freight pricing, limited shipping space, and extreme port delays keep demand and pricing high. Below we have provided an update on some of the key products that have been impacted.
Organic Desiccated Coconut
The first quarter of 2021 has seen a rise in costs and delivery times for most of the desiccated products as organic coconut suppliers scramble to fill their 2020 Q4 and 2021 Q1 shipments. As Filipino suppliers catch up with the heightened demands, freight cost and delays continue to be the overwhelming factor, keeping material costs high.
International freight rates continue to rise, as much as 125% increase year-over-year from certain origins, causing many suppliers to provide only FOB pricing at this time, with no guarantees of on time arrivals. This market is expected to remain strong through the summer months and supply will be limited.
What this means to you:
Buyers should be focused on ordering enough supply to last through at least the end of Q3 if possible. Expect pricing to continue to be higher than normal due to less supply, higher shipping costs and continued supply shortage until mid-summer at earliest. Fine and Toasted Chips are more stable, while Medium and Untoasted Chips will remain on shortest supply.
Organic Coconut Sugar
As with the desiccated products, organic coconut sugar supply is stable, yet tight. Raw material for coconut sugar is still lagging due to the surge in demand during the pandemic, resulting in minimal surplus/safety stock in the US. The limited availability of shipping containers further exacerbates the problem and will most likely cause continued tight supply in the coming months. In addition, many factories close down for two weeks during Ramadan (which falls in April). Based on this yearly occurrence, an additional 2–4-week lag on lead time for larger orders around this time is likely.
The US Government’s failure to extend the GSP (Generalized System of Preferences) has compounded pricing increases due to supply, resulting in a 5.1% tariff on all imported Coconut Sugar.
What this means to you:
Buyers can expect to pay higher prices as demand & shipping costs remain high through the summer months. In addition, extended lead times are to be expected through May. Relief may not come until fall, unless Indonesia sees an increase in empty export-ready shipping containers, and an increase in raw material availability. We advise all buyers capable of pulling material through June/July demands to do so.
Organic Coconut Flour
Organic coconut flour supply has become more stable from Vietnam and Sri Lanka as organic virgin coconut oil production catches up with demand. Many organic coconut suppliers are booking contracts through Q4 at this time, at stable rates.
The US Government’s failure to extend the GSP (Generalized System of Preferences) has also hit all origins on this material, resulting in a 9.6% tariff on all imported Coconut Flour.
What this means to you:
Although pricing is stable, the un-extended GSP along with backed-up supply chains from the Philippines have resulted in increased costs on Coconut Flour which will remain through 2021. We encourage all buyers to contract this material through June/July, when supply chain relief may start to show.
Organic Coconut Oil
Like flour, both Organic RBD and Organic Virgin Coconut Oil supply is becoming increasingly stable, but at a premium. The Filipino typhoons of late 2020 have set larger buyers behind, causing increased demand on manufacturers that remain on time and active on production, and have resulted in rates as high +30-50% year-over-year.
What this means to you:
Although organic coconut oil supply remains on the stable side, material is at a steep premium. We recommend that if possible, buyers contract through the summer months, where suppliers are willing to offer better cost and offset current higher rates.
Thanks for reading! If you have questions about the availability or pricing on any of our organic coconut products, please contact us at hello@thecoconutcoop.com.
