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Shipping costs lowered, but trade haunted by global woes

Despite notable drops in the cost of shipping containers from China to Europe and the United States since late 2021, many Chinese exporters have delayed their delivery times for existing orders and instead rushed to secure fresh orders, to cope with the changing scenarios both at home and abroad.

The Russia-Ukraine conflict has inflated prices of energy and agricultural products in Europe and the Middle East, besides causing fluctuations in the exchange rate of the US dollar. “These factors have weakened consumption in these regions and squeezed our export volume,” said Jin Xiaomin, chairman of Zhejiang Kingston Supply Chain Group Co Ltd, a Yiwu, Zhejiang province-based goods exporter.

“Many Chinese companies booked shipping containers in advance last year because it was hard to find an available container back then. But, they stopped adopting such measures this year as freight rates and foreign trade orders have declined while shipping capacity provided by companies such as Maersk Line and CMA CGM SA has surged,” he said.

For instance, the cost for a container shipped from ports in Shenzhen, Guangdong province, to ports on the west coast of the United States has dropped from a high of $17,000 last year to around $8,000 this month.

“Our manufacturing and delivery period used to be between 30 and 60 days. Affected by the price increase of raw materials last year, together with the COVID-19 resurgence in Shanghai, our production capacity is tight. It has been extended to 60 to 90 days,” said Chen Yanzhen, an exporter selling daily necessities at the Yiwu International Trade Market in Zhejiang province.

“Similar to our situation, many factories’ work schedules have been filled for over three months recently,” he said, adding the company has kept expanding its sales channels in other emerging economies to offset the uncertainty caused by declining orders from Europe and the Middle East.

To further ease the pressure on exporters in the country’s Yangtze River Delta region, Shanghai Customs has introduced targeted measures to improve its operating efficiency in the face of a local COVID-19 resurgence since last week.

Supported by new measures, import and export declarations can be completed online, while goods inspection can be conducted without staffers of companies in attendance at various ports in Shanghai.

Even through experiencing a short-term lockdown due to anti-COVID-19 measures last year, Yantian Port of Shenzhen, Guangdong province, about 1,200 kilometers away from Yiwu, has already entered a busy season. It currently operates services for 104 routes and runs 20 berths at full capacity.

“All the companies in our industrial park were able to resume work and production within a week after a brief lockdown in Yantian Port last year, thanks to the supply chain advantages of China’s Pearl River Delta region,” said Li Tianju, general manager of the management department of Shenzhen KTC Technology Co Ltd, a manufacturer of commercial display products with more than 6,000 employees.

Instead of solely importing liquid crystal display (LCD) panels from foreign countries, she said the company has also built close partnerships with suppliers in Pingshan and Qianhai logistics parks in Shenzhen. The company’s export business hasn’t been affected by uncertainties in global markets.

China’s position in the global supply chain is still competitive and resilient, said Tu Xinquan, dean of the China Institute for WTO Studies at the University of International Business and Economics in Beijing.

“Whether in final consumer goods or some intermediate products, it is hard to find a supplier of this size and quality at both price and performance ratio in the global market, especially in the area of mechanical and electrical product manufacturing,” Tu said.

China’s foreign trade soared 10.7 percent on a yearly basis to 9.42 trillion yuan ($1.48 trillion) in the first quarter, data from the General Administration of Customs showed.
Source: China Daily

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