From January to July this year, China’s foreign trade maintained a rapid growth momentum, with a growth rate of 24.5 percent, the highest in a decade, Wang Wentao, minister of Commerce, said at a press conference held by the Information Office of The State Council on August 23. However, he also pointed out that the current foreign trade enterprises are also facing the “four difficulties” — the impact of transport capacity and freight rising, bulk commodities, raw materials, the pressure of RMB exchange rate appreciation, the increase of labor costs. For small and medium-sized foreign trade enterprises, it is more difficult.
“Securities Daily” reporters interviewed a number of foreign trade enterprises, they all talked about the current biggest difficulty is the rise in freight rates. “Our company’s international logistics costs are all borne by the customer, but the current international logistics shortage and high freight rates have caused interference to the company and even the entire export industry, and customers may require delay of delivery.” A machinery and equipment manufacturing listed company staff told reporters.
Freight prices rise in shipping prices related indicators have the most direct embodiment. Recently, the Baltic Dry Index (BDI), which reflects spot market conditions, has continued to rise. “Securities Daily” reporters query relevant data, since the third quarter, the lowest BDI was 3039 points on July 16. Since August 6, BDI has shown a continuous upward trend, reaching 3371 points on that day and 4092 points by August 20. In other words, BDI increased by 721 points or 21.39% in half a month. It is up 1,053 points, or 34.65%, from its July low. On August 23rd it rose further to 4147, a new high for the year.
For example, the shipping cost of a 20’ container power cord exported by our company to the Middle East was around us $1,000 before the epidemic, but now it has risen to over US $8,000, an increase of more than 7 times. Since we quoted CIF price, it directly led to serious losses and we had to negotiate with the customer for price increase.
Mismatch between supply and demand
Resulting in bottlenecks in capacity
“The root cause of rising international freight rates and container prices is the mismatch between supply and demand.” Tao Jin, deputy director of the Macroeconomic Research Center of Suning Financial Research Institute, said in an interview with Securities Daily that international trade has picked up with the global economic recovery and transportation demand has expanded, but it is difficult to effectively improve shipping capacity supply due to repeated global epidemics. At present, there is congestion in some ports. Epidemic prevention and inspection has increased the accumulation of containers and goods in ports, which has reduced the efficiency of port dredging and caused subsequent delays and congestion of land and inland river transportation, further reducing the capacity and exacerbating the fluctuation of freight rates in the short term.
In fact, in the second half of last year, the number of boxes skyrocketed and freight rates soared. Xiang-dong liu, vice-minister of the China international economic and exchange center for economic research on the “securities daily” reporters, unlike last year, this year affected by national economic stimulus policies, demand side, a surge in demand, especially in North America and docking of supply and demand on capacity bottlenecks, namely the logistics supply chain encountered difficulties, combined with the overseas infrastructure ability is limited, Market capacity did not appear growth signs, actual cargo capacity and transport efficiency generally decline.
At the same time, as the number of ships increases, the congestion of ports intensifies, and the phenomenon of shipping delays caused by congestion increases the freight price, even exceeding the value of low value-added products.
In xiang-dong liu’s view, limited capacity to constrained the performance ability of our country’s export orders, while to delay the delivery method, but does not fundamentally improve the efficiency of supply chain, therefore need to accelerate port congestion problem, in addition to update and upgrade port infrastructure and supporting facilities, to make full use of digital and information technology means, We will enhance the automation of port operations and solve the problem of vessel congestion in an orderly manner. In addition, it is also possible to increase the conversion of multiple modes of intermodal transportation. Ports around the world should strengthen the coordination of supply chains and propose comprehensive logistics solutions.
Post time: Sep-01-2021