The entire global supply chain has been impacted due to the COVID-19 outbreak, which has led to disruption in marine container shipping services. To allow adequate booking time in the current environment, we are asking all customers to provide an additional lead time for non-marine based shipments and 3-4 weeks lead time on all marine orders, due to canceled sailings by major marine suppliers. Current disruption estimates project capacity disruptions through July that will continue to make it more difficult to acquire space for short lead time orders. We are working to assure future vessel space allocations and using track and trace of shipments in transit to provide customers with updated estimated arrival times. We are seeing truck and rail return to normal operations in most areas of the world, with few areas experiencing delays.
As part of our efforts to align production and demand and ensure your supply is not disrupted by a last-minute diversion of inventories, transportation equipment, or logistics resources, previously implemented a 25% surcharge for order cancellations or requested changes inside of five business days of shipment. This surcharge is still in effect.
Please read this customer letter for full information.
We realize this situation remains very dynamic. We will continue to provide updates as we learn more. We are confident in our preparation and contingency planning for situations such as this. We remain committed to providing the superior service and support that our customers have come to expect of our company throughout this situation.
Eastman’s operations are currently running at levels to meet customer demand.
Yes, our Wuhan, China site is fully operational following approvals by the government to restart over the weekend of March 23rd.
So far, it has been determined that Eastman's facilities can continue operation in compliance with governmental orders. We will adhere to strict requirements and will continue to monitor the situation to ensure our employees are safe and our operations are being run safely.
We have the continued production capability and necessary inventory to continue to supply the products needed by our customers at this time. Majority of our manufacturing sites have remained fully operational hence very limited risk at this time.
Our procurement team continues to actively engage with our key raw material suppliers to understand any potential impact. We do not foresee any shortage on key feedstocks to continue production for our customers. We continue to work closely to ensure our suppliers can meet our needs to keep our manufacturing processes running.
The entire global supply chain has been impacted due to the COVID-19 outbreak, which has led to disruption in marine container shipping services. To allow adequate booking time in the current environment, we are asking all customers to provide an additional lead time for non-marine based shipments and 2-4 weeks lead time on all marine orders. Current disruption estimates could last for several months and are working to meet customer requested dates, but there will likely be some delivery delays. We are working to assure future vessel space allocations and using track and trace of shipments in transit to provide customers with updated estimated arrival times. While we have seen some truck delays at international borders, shipments are still moving through these points.
No guidance has been given by the World Health Organization that fumigation or any other pro-active measures need to be taken in the handling and shipment of materials at this time. Imported goods transit times exceed beyond the life of the virus.
We are continuing to assess any potential business impacts at this time. We will continue to monitor the situation daily and will stay closely aligned with our customers. We have identified areas which we consider critical to operate. Within these areas, we have developed operational continuity plans to ensure we have sufficient resources to keep plants running and products shipped to our customers.
We are not aware of any decision by the United States government to "target" Eastman products. Our effort is focused on continuing to supply products to our customers. Any unanticipated change in the availability of Eastman products will be communicated to all customers should the need arise.
Our commercial teams are very engaged with customers and are working to identify any potential impacts as we work through this together. Our sales teams are working with customers daily to assess the situation and potential slowdown in shipping and delivery.
We have identified areas which we consider critical to operate. Within these areas, have developed operational continuity plans in our teams to ensure we have sufficient resources to keep plants running safely and products shipped to our customers. We have implemented a plan to remove non-operations personnel from operating areas to further protect the health of our operators and mechanics who are needed onsite to continue running our manufacturing processes. A portion of employees who are critical to maintaining operations have been assigned to rotating teams who will be in the offices during alternating two-week rotating schedules. Those who can perform their jobs from home and do not have to be in our offices, will begin working from home to minimize any potential virus transmission between employees.
We have also implemented business and personal travel guidelines and a mandatory 14-day quarantine of any employees who have been in any areas of concern. We have also shared the same expectations with our on-site contracting companies and logistics providers to also mitigate the risk of spread into our operations areas. Our pandemic team will continue to guide appropriate measures which should be taken during this event and take actions necessary to ensure our operations continue running.
Eastman has activated its corporate Pandemic Preparedness Plan and team. The plan includes measures to maintain business continuity including IT, financial, manufacturing and supply chain functions. This team will continue working to determine the appropriate measures which should be taken during this event and will guide our actions in responding to this global outbreak.
We have identified areas which we consider critical to operate. Within these areas, we have developed operational continuity plans to ensure we have sufficient resources to keep plants running safely and products shipped to our customers.