SHANGHAI: Surging overseas orders for Chinese goods are creating rising pressure on ports and shipping companies, and related parties are working together to break the deadlock.
PowerRide, a British customer of Easy-try Cycles (Tianjin) Co Ltd, is facing fast-rising freight rates from China.
“Shipping costs of a 40-foot-container from Tianjin to the United Kingdom soared from US$3,000 (RM12,440) to US$14,000 during the few weeks before Chinese New Year, and the company ended up paying US$10,000 per unit for shipping the bikes they purchased, ” said Li Qing, president of Easy-try Cycles.
“The FOB (free on board) contract we signed did protect us from paying the escalating logistics costs, but we were equally hurt by the stockpiles of products and follow-up capital flow stress, ” Li said.
Due to rising logistics costs, clients are sometimes delaying shipments to wait for rate reductions. As a result, export-oriented companies like Easy-try Cycles are experiencing inventory stockpiles.
The Ministry of Commerce said China’s 2020 exports grew 4% year-on-year to reach 17.93 trillion yuan (US$2.73 trillion).
However, Chinese exporters, who were buoyed by skyrocketing orders in the second half after a long slump due to the pandemic, found themselves trapped amid a critical shortage of shipping containers.
The container shortage began in the second half, and became extremely acute at the beginning of 2021, said Zhou Dequan, director of the Shanghai International Shipping Institute’s domestic shipping research office.
Although containers continued to move from Asia to Europe and North America, few were crossing the seas in the opposite direction due to Covid-19 restrictions as well as labour shortages at European and North American ports, warehouses and inland logistics facilities.
Currently, there is an imbalance in North America – only four containers were sent back for every 10 arriving, according to a CGTN report.
The asymmetrical ebb and flow of containers finally led to a reduction in containers needed for bulk goods transport, resulting in soaring freight costs for exporters, Zhou said.
Figures from the Shanghai International Shipping Institute showed that shipping rates began to rise in the second half. Shipping costs from China rose rapidly, and reached a 12-year high by the end of December.
The gap between demand and transport capacity resulted in a large amount of goods awaiting export being piled up on Chinese wharves.
In Easy-try Cycles’ case, the company planned to ship 90,000 units of bikes delivered to one of their US clients – Walmart – by the end of May, but only around 2,000 were shipped as of mid-March, Li said. — China Daily/ANN