Activated carbon supply: How you can meet the demand for large-scale applications in 2021
Around 80 percent of the global trade in goods is carried out by sea. Seven of the ten busiest container ports in the world are in China. In the first Corona Lockdown in 2020, shipping companies drastically reduced their capacities. But Asia, and China in particular, was already recovering from the pandemic, while the rest of the world was still in the middle of the crisis. Due to the sudden increase in freight demand in Asia, there was a massive bottleneck in ships and containers. This led to longer delivery times and massively higher freight prices for the activated carbon supply in Europe and the USA.
Asia as the main exporter for activated carbon
Most of the activated carbon comes from Asia by container freight. With around 277,000 tons, China was the main exporting country of activated carbon in 2019, which makes up 31% of total exports. India (102,000 tons) ranks second in terms of total exports with a share of 11%, followed by the Philippines (8.7%), Belgium (7.6%), the USA (7.5%) and Germany (5.7%) and Sri Lanka (5.2%).
Effects of lockdowns on activated carbon supply
The shipping industry massively reduced capacity during the initial lockdown to cope with lower demand and prevent a complete collapse in freight rates. Around 400 container ships with a capacity of almost 2.5 million standard containers were not used. This is considered an all-time high. According to a report by the shipping consultancy firm Sea-Intelligence, the largest loss of capacity occurred on the Asia-Europe routes, where 29 to 34 percent of capacity was cut.
Due to the uncertainty about the further course of the pandemic and the number of containers stuck at various transshipment points during the pandemic, shipping companies continued to drastically reduce their departures. On long-haul routes in particular, this led to the closure of services, the merging of routes and empty trips.
Then came the easing of lockdowns in certain countries. Above all China, which had recovered surprisingly quickly from the pandemic. Consumer demand rose again, and companies in all industries began stocking up to avoid repeating what happened during the lockdown.
Subsequently, this led to a huge surge in demand for containers due to a combination of catching up on failures during lockdown, increased demand for medical and hygienic products, and an unprecedented surge in e-commerce.
Extreme shortage of containers since the end of 2020
All goods coming from Asia are currently affected by the shortage of containers. The current situation has a significant impact on the activated carbon supply. Various factors play a role here:
1. Corona-related import restrictions: Container ships are currently stuck on the US west coast due to stricter entry regulations. There are waiting times of up to three weeks. As a result, there is a lack of overseas containers for ships to Europe in China.
2. Slowed work processes in ports: Due to the corona situation in ports around the world, work is slower, which means that the return of empty containers from the USA and Europe to Asia takes significantly longer than usual.
3. Full utilization of the ships: Due to the boom in online trading, the capacities on the container ships are fully utilized. The existing ships are not sufficient to transport the huge amounts of goods.
4. Decommissioned containers: After being relocated in the first lockdown, many containers are not yet in circulation again, but are instead stuck somewhere in the outback.
5. Preference for Pacific routes: Container shipping companies are shifting their shipments from Asia to the Pacific in order to meet the high demand from the USA. This means that there are no ships on the route between Asia and Europe.
The consequences are container deficiencies on freight routes, container and goods jams in destination ports and freight ships that have been booked out for weeks. While the demand for containers increases, availability remains critical, which means enormous increases in freight costs.
Freight rates for activated carbon are still plus 300 percent
Freight costs have risen continuously since June 2020. In November the situation came to a head to such an extent that there was a real explosion in freight prices. From November to mid-January alone, freight prices between China and Europe were three to four times more expensive. In some cases, freighters charged more than $ 10,000 for 40-foot containers - instead of $ 2,000 as was the case in summer 2020.
Freight rates are currently rising again and, according to Drewry's World Container Index, averages over $ 6,000 per 40-foot container (as of May 27, 2021).
Activated carbon supply: Outlook on the next few months
High freight prices and delayed deliveries will keep the economy in Europe busy for even longer. At the moment there is no sign of any relaxation in the freight situation and, in our opinion, the situation will remain critical until the end of 2021. Furthermore, we do not expect that decommissioned ships will be fully reactivated or that the construction of new ships will be intensified. Therefore, the cost of freight rates is expected to remain higher than before the crisis.
Our recommendations and how we can support you
In the current situation, many producers are wondering how they can secure their activated carbon supply. Despite possible delays and high freight costs, there are a few steps you can take now:
1. Plan longer delivery times for activated carbon
In normal times, the delivery time for activated carbon from Asia is 8 to 12 weeks. However, the delays and disruptions in the ports are currently so serious that timetables can often no longer be adhered to.
This development is also reflected in the global adherence to deadlines of container ships. According to Sea-Intelligence, the “Global Schedule Reliability” benchmark fell to 44.6 percent in December 2020. Compared to December 2019, adherence to deadlines is 31.7 percent lower.
The delivery time for activated carbon is currently between 12 and 14 weeks. You should therefore take longer delivery times into account when calculating your requirements and place your order early. We recommend planning an additional delivery time of four weeks.
2. Rely on longer-term supplier agreements
Longer-term agreements improve the possibilities for proactive control, among other things by securing capacities or planning transports in good time. Donau Carbon also stocks activated carbon in Europe on the basis of customer-specific agreements. Standard coals are available at various central warehouses in Germany for a wide range of applications such as water treatment, gas and air purification, the food sector or solvent recovery.
3. Check alternative products
Sometimes activated carbons can be used in the production process, that may not quite meet the ideal specification, but are available more quickly. Should a product become very scarce, we will check the usability of alternative products for your application in consultation with our application technology department. The standard products in our warehouses can be used in a variety of ways and are an effective option for bridging bottlenecks in an emergency.
4. Optimize logistics routes
The tense situation currently requires a high degree of flexibility and rapid solutions if there are problems in the port. If necessary, we optimize the logistics routes or work with you to examine logistical alternatives such as B. other ports that have better availability, or rail or truck transports.
Conclusion: ensure the supply of activated carbon in good time
The course of the corona epidemic so far makes it clear how vulnerable global value chains are in times of crisis. The supply of empty containers and freight spaces is currently under enormous pressure and will probably only improve towards the end of the year. You should therefore secure your activated carbon requirements in good time and take into account the significantly longer delivery times from Asia to Europe in your planning