Logistics Costs Continue to Climb While Manufacturers Play Catch-up on High Demand

As Coconut manufacturers and importers continue to play catch-up on very high demand, external logistics factors including continued increases in freight pricing, limited shipping space, and extreme port delays keep pricing high. Below we have provided an update on our products.

Organic Desiccated Coconut

The first half of 2021 has seen a rise in costs and delivery times for most of the desiccated coconut products as suppliers scramble to fill their 1st and 2nd quarter 2021 contracts and orders.  As Filipino and Sri Lankan suppliers play catch up with their existing contracts and increasing demand, freight cost and delays continue to be the overwhelming factor, keeping material costs high yet stable.

International freight rates continue to rise, now as much as 170% increase YoY from certain origins, causing many suppliers to provide only FOB pricing at this time, with no guarantees of space on vessels or ship dates.  The West Coast ports continue to be the overwhelming problematic ports, with not only extreme rates, but also 2–3-week delays remaining standard on arrival.

On average, suppliers are still backed up about 2 months on production, with many only offering product 3 months out. Demand will stay high until Fall, if not through all of 2021, with supply limited and pricing at 5-year highs. Many importers are choosing to go ‘off the market’ on desiccated material through the summer.

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 tick upwards through summer due to increasing demand, higher shipping costs and continued supply shortage. Medium Grade DC will remain on shortest supply due to larger volume industrial demands.

Organic Coconut Sugar

Sugar supply continues to be tight yet stable; however, as with all imported ingredients, freight costs continue to be the overwhelming factor on pricing and timing of inventory. Raw material for coconut sugar continues to lag due to a less than optimal harvest paired with the surge in demand during the pandemic, resulting in minimal safety stock in the US.  The limited availability of space on shipping containers further exacerbates the problem, causing continued tight supply through the summer months. Freight costs accordingly continue to increase, up another 10% May to June.

The US Government’s failure to extend GSP (Generalized System of Preferences) has compounded pricing increases due to supply, resulting in a 5.1% tariff on all imported Coconut Sugar for the foreseeable future.

What this means to you:

Buyers can expect to pay higher prices as demand & shipping costs remain high until through the fall at earliest. In addition, extended lead times are to be expected, with freight averaging an additional 3-4 weeks to land at stateside warehouses.  We advise all buyers capable of pulling material through fall demands do so, and there is significant threat for these effects to hang over into 2022.

Organic Coconut Flour

With demands on Organic Virgin Coconut Oil remaining high, organic coconut flour supply has remained stable from most origins.  Many suppliers are booking contracts through Q4 at this time, at stable rates. As with all items, longer lead times are to be expected with the continued international logistics issues. As a low-cost material, Coconut Flour also remains the hardest hit from freight increases.

The US Government’s failure to extend 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 extreme freight rates have resulted in increased cost on Coconut Flour which will remain for the foreseeable future. We encourage able buyers to contract this material through fall.

Organic Coconut Oil

Like flour, both Organic RBD and Organic Virgin Coconut Oil supply is becoming increasingly stable, but at a serious premium.  With the recent ban of Palm Oils at some origins, local markets have resorted to RBD material to replace a standard industrial ingredient, resulting in a significant demand squeeze on Organic RBD Coconut Oil pricing.

What this means to you:

Although Coconut Oil remains on the stable side of the Coconut Ingredient portfolio, material remains at a considerable premium, especially RBD material. Freight costs and delays continue to force buyers to have no choice but to pay premiums for material, which furthers the market’s bubble. We recommend, if possible, buyers contract through the summer months at minimum.

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.