China Exports are Soaring, but …

The Shortage of Shipping Containers

The end of each year is the busiest time for every major ports in China, but this is not the case this year. Large ports in China are empty, while ports in Europe and America are filled with containers that have crossed the ocean. The shortage of containers has been going on for a long time. A large number of containers are backlogged in the ports of the United States, United Kingdom and other countries, and the degree of warehouse explosion and blockage is getting worse.

Shipping Cost soared

A person in charge of the export of small household appliances in China said that in the second half of the year, shipping costs soared, containers were in short supply, and exports were stagnant. Many foreign customers took a wait-and-see attitude and waited for container prices to stabilize before shipping. The factory warehouse is now full, and funds are stagnant.

Sea Freight or Air Freight

A business person in Dongguan, China said, “Now ordering cabinets basically needs to be one month or one and a half months in advance. Not only does the price double, but it may not be available. Sea freight has become even more expensive than air freight, and many of our goods have begun to change to Air freight.”

Container Availability Index

The latest container availability index report of Container xChange, a one-way container mobile online platform, shows that the current availability of 40-foot containers in China is only 0.05 points (0.5 is the line of prosperity), compared with 0.63 points in the same period last year. The availability of containers in major ports hit historical lows.

Increased 2 to 3 times

Compared with that before the outbreak, containers of all routes have increased two to three times. It is understood that the price of containers from Shanghai to North America has soared to five or six thousand US dollars per box; more than four thousand US dollars to Europe; and approximately two thousand US dollars to Southeast Asia.

Exchange Rate Increased

The exchange rate of the renminbi against the U.S. dollar has risen since the end of May this year, reaching a high of more than two years, and cumulatively appreciated by nearly 10% from the year low at the end of May. The exchange rate of US dollar to RMB reached 6.5460 on December 11.

Profit Reduced

A person in charge of a foreign trade enterprise exporting small home appliances to Europe said, “For the home appliance industry, although the export volume this year has increased compared with previous years, delivery delays in some areas can only watch the exchange rate rise and profits gradually going down.”

Good or Bad ?

Facing the new Covid pandemic, Chinese traditional foreign trade export companies can be described as “a mixed of good and bad”. Vietnam, Cambodia, Bangladesh and other regions are still unable to carry out production due to the epidemic, and a large number of orders have been transferred to China.

Volume Double but Delayed Delivery

The person in charge of the aforementioned foreign trade company that exports small home appliances to Europe said that the current order has been scheduled to next May, and the volume has increased at least twice.

Profit Down

However, smaller foreign trade companies cannot fully enjoy this dividend in the face of higher exchange rates, and their profit margins have even been reduced to negative.

Under normal circumstances, the profit margin of small and medium foreign trade companies that export molds, small home appliances, and outdoor products usually swings around 5%. The appreciation of the RMB against the US dollar has reached 7%, and profits have almost been all crushed.

(The above information is source from 21金融圈)

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