Global logistics shall remain under pressure, says Suzano

Global logistical chains remain stressed, and there is no indication that this situation will change in 2022. In fact, the case is quite the opposite: the adoption of lockdowns to contain the Covid-19 outbreak in China could exacerbate global transportation bottlenecks, assessed the director of forestry, logistics, and supplies at Suzano, Carlos Aníbal de Almeida.

“The lockdowns in China bring more uncertainties regarding economic recovery to the surface. They can even make the situation worsen,” the executive told Valor. “We see no prospect of improvement in 2022.”

According to Aníbal, Suzano, the world’s largest producer of eucalyptus pulp, has also faced delays in shipping because of longer lead times amid congestion in several ports worldwide. However, it is still managing to neutralize the effects of global maritime transportation bottlenecks due to its logistical structure, which comprises three ports in the country and a fleet of ten vessels contracted with the Korean Pan Ocean.

Bottlenecks in maritime transportation began with the stronger-than-expected resumption of demand when large economies began to relax isolation measures against the new coronavirus when the pandemic also reduced the supply of containers.

Part of the cargo transported in containers migrated to loose cargo ships (break bulk), which producers of pulp and other commodities traditionally use. As a result, vessels began to carry more diverse loads and stop at more port terminals than usual, directly impacting the time elapsed between the product’s shipment and its arrival at the destination.

In addition, many countries imposed labour restrictions to reduce Covid-19 infections, resulting in the suspension of activities in strategic ports, as was the case recently in Shanghai. “The contracts [with shipowners] provide for a window, but vessels are not contemplated. This contributes to congestion at ports, affecting everyone,” explained the executive.

Specifically in the pulp industry, problems in global and regional supply chains led to a reduction in the supply of raw materials. As a result, on the 8th, the net price of hardwood in the Chinese market exceeded US$ 780 per ton, up 20% in less than two months.

Limited availability of wagons and trucks and a lack of truck drivers have hampered the operation of factories in North America and Europe, limiting the supply of chemicals and wood used in the process and the flow of the pulp produced. In China, the fear is of pulp shortages since stocks are low and the displacement from producers is much greater than average.

Analysts at BMO Capital Markets stated at the end of March that logistical and transportation challenges in Canada, a country with big producers of softwood pulp, were the worst in years, worsened by the scarcity of railcars.

The remark came after Canfor revealed that its sawmills in western Canada will run at lower rates in April due to rail transport constraints. In addition, production at one of the company’s pulp mills in Taylor (British Columbia) has already been halted, and the company might extend the measure for another six weeks.

Source: Valor Econômico

To read the full original article, please go to:

https://valor.globo.com/empresas/noticia/2022/04/11/logistica-global-seguira-sob-pressao-no-ano-diz-suzano.ghtml

Sharing is caring!