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HomeSourcingProvide Chain Weekly Wrap-Up 06/17/2022-06/23/2022

Provide Chain Weekly Wrap-Up 06/17/2022-06/23/2022

Indonesia set to export chickens to struggling Singapore

The Indonesian authorities are looking to reach an agreement with Singapore to start exporting chickens in the coming weeks, according to officials. The city-state is struggling with supply chain issues, as one of its supply sources, Malaysia, recently restricted its chicken exports this month due to soaring costs. This further sign of global food shortages has left Singaporean restaurants and street stalls without the essential ingredient of its national dish, chicken rice.

The Singapore Food Agency (SFA) has said that it is “working closely” with Indonesian authorities to reach a deal to appoint the country as a potential source of chicken imports. A key reason for choosing Indonesia is the fact that it currently has a surplus in chicken production. The country produces between 55 and 60 million birds per week, with a surplus of around 15% to 20% after domestic production, according to Achmad Dawami from the Indonesian Poultry Breeders’ Association.

Problems have arisen in Malaysia, previously one of Singapore’s key suppliers of chicken, as rising costs due to the Russia-Ukraine war have disrupted production. Despite the fact that Malaysia will partially lift its export ban on certain premium chickens, the ban on exporting commercial broiler chicken, which makes up the majority of Singapore’s imports, will remain.

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World’s biggest truck producer facing supply chain challenges

Daimler Truck, whose brands include Mercedes-benz, Freightliner and Western Star, are facing severe parts shortages, slowing the production of thousands of vehicles. The company’s CEO, Martin Daum has said that the current supply chain struggles have led to “one of the worst years ever” in his long career in trucking, as Daimler are facing major bottlenecks across its range of brands.

Just as the semiconductor shortage started to ease, Daum said that shortages of other essential vehicle parts are continuing to cause havoc for the industry, with the company being under “enormous pressure.” He said that in some places, there are “more than 10,000 trucks where one or two parts are missing”, meaning employees are searching across the world for the components so the vehicles can be finished.

External inflationary factors are also causing trouble for Daimler Truck’s production ability, with the cost of energy and raw materials on the rise. Despite the struggles the company are facing, in the U.S. alone, Daimler Truck has seen increased demand levels, with 200,000 trucks currently in demand. However, the positive demand levels are a threat to the already-struggling supply chains.

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The cost of shipping spikes due to unstable fuel markets

Fuels required for shipping, including diesel, have significantly increased in price since Russia’s invasion of Ukraine caused havoc for global fuel markets. The conflict in Ukraine has tightened energy markets massively, forcing buyers into using alternative fuel supplies. The rates for hauling crude oil have not yet surged, with the lack of demand from China playing a part in this, meaning some shipping companies have switched some of their fleet to haul fuels rather than oil, according to tanker charterers.

Gasoline and diesel rates, which are also known as clean tanker freight, have more than doubled in recent months, reaching the highest level recorded since April 2020, according to Baltic Exchange Data. One example of the price hikes includes a route from South Korea to Singapore, where ship owners are earning more than $49,000 a day transporting goods between the two countries, and this figure sat at $98 per day before the war began.

Amid the ongoing problems, the demand for ships to haul fuels are expected to increase by 6% this year, according to Anoop Singh from Braemar ACM Shipbroking. “The European resolve to reduce reliance on Russian supplies will likely outlive the war in Ukraine and that will re-draw trade routes,” said Singh. Russia was the single largest external supplier of diesel to Europe prior to the war.

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BtoB Central Staff
BtoB Central Staff
Btobcentral is dedicated to business news.


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