Dear Valuable Customer,
Welcome to 2021. European Portwell Technology wants to use this communication to brief you on several Critical Supply Constraints currently facing everyone globally, and your supply chain partners in particular. Please work with our Account Management and Sales team to address your demands when forecasting and/or placing orders. We need to work closely together to face this challenge and act as soon as possible.
Lead-time and Price Increase
• Raw Materials
Steel: Iron Ore prices increased from $60 per ton in April 2020 to $155 per ton in end of December 2020. Steel prices during the same period rose more than 82 percent. This will impact the sheet metal for chassis, enclosures, data centers, and much more.
Steel Should Continue To Rise In 2021, And Producers Will Benefit (NYSEARCA:SLX) | Seeking Alpha
Copper: Prices continue to rise, predicted at end of 2020 for a 17 percent increase at $3.5/lb. or $7,716/MT. As of January 20, 2021, the LME (London Metal Exchange) price at $8,014.5 already exceeds the previous estimate. This increase will impact printed circuit board, wire harness, and cables.
LME official copper prices and averages | Fastmarkets Copper Price (ycharts.com)
• IC/Passive/PCB
Semiconductor (Power IC, MOSFET, Memory): Due to capacity constraints, major IC Foundries such as TSMC and Samsung Electronics have both pushed out delivery, some over a year, and, while prices keep escalating, we still can’t curtail the growing demand. Electrical Vehicles, 5G Telecommunications and Infrastructures, Home and Game Computing have consumed most if not all of the output.
Global semiconductor shortage puts pressure on tech supply chain | Taiwan News | 2020/12/18
Poor Planning Led to Carmakers’ Massive Semiconductor Shortage - Bloomberg
Passive Components: Major MLCC manufacturers such as Murata and Taiyo Yuden have pushed out their lead-times. Although they are improving the yield and capacity, the supply still can’t catch up with rising demand. Yageo has also re-allocated its production capacity for high yield products, making some lower-end resistors/capacitors even scarce to get.
Printed Circuit Board: With the increased price of copper, and the rapid demand for Electrical Vehicles such as Tesla, manufacturers have increased their lead-times, and now require a forecast and a deposit to secure capacity and future delivery.
Freight Charge Skyrocketed with Less Capacity
• Common Carriers
First the COVID-19 Pandemic during Q1/Q2 in 2020, and later the demand increase and reduced capacity by airlines and vessel companies have caused freight constraint across the Pacific shipping lanes. Notably, major Carriers such as FedEx and UPS already announced their delayed delivery and are adding 1—2 days to their OTD.
• AIR Freight
Air freight prices rose as high as 700 percent per kilogram from Taiwan to San Francisco since March 2020. Air freight is expected to increase even more if the COVID-19 Pandemic continues.
Lack of passenger flights squeezes air freight capacity in peak season | Reuters
Peak shipping season for air cargo heats up to full boil - FreightWaves
• OCEAN Freight
Since June 2020, Ocean Freight prices have been adjusted 8 times, to an increase of more than 280 percent now. Both FFE (Forty-Foot Equivalent) and vessel sailing schedules are reduced, making material planning difficult to schedule without a firm Estimated Time of Arrival (ETA).
Ocean Carriers Struggle to Cope with Equipment Shortages as Transshipment Ports See Cargo Surge - Supply Chain Management Review (scmr.com)
Booming Taiwan urges shippers not to jack up prices amid container shortage | Reuters
Evertiq - Is This The Perfect Storm?
Exchange Rate between US Dollar and NT Dollar
The value of New Taiwan Dollar (NTD) continues to appreciate and reaches historic high lately. As of Thursday, 1/21/21, the Exchange Rate is $1US Dollar to 27.968 New Taiwan Dollar. The NT Dollar’s dramatic appreciation against the U.S. Dollar has imposed great difficulties on our cost structure.
US Dollar (USD) to Taiwan Dollar (TWD) exchange rate history (exchangerates.org.uk)
Action Required
As the lead time and price for raw materials have increased tremendously this year, we need your rolling forecast loaded into the system once it is available. We will then try to prepare the parts with your new blanket POs as early as possible to avoid any shortages.
Thank you for your understanding and attention.
