China’s shipping insiders brace for another full year of rising freight rates having a ‘profound impact on trade’
- Some exporters continue to stockpile goods in warehouses as cash flow dwindles, while others endure higher shipping rates amid supply-chain disruptions
- Despite fretting exporters, China’s foreign trade performance beat expectations in November, with an 8.4 per cent growth in exports over the previous month
Surging shipping costs in a year riddled with supply-chain disruptions are straining China’s small commodities exporters, and industry insiders are bracing for more challenges to come as they say high freight rates could stretch into 2023.
Jiang Tianqing, an exporter from Yiwu, Zhejiang province, said many of his clients have dropped orders due to the high shipping costs. He is also struggling to maintain adequate cash flow, as his goods such as mirrors and combs are low added-value items that return slim profits.
“Everyone is in a difficult position,” Jiang said. “The intensity of the blow depends on their capacity to weather and manage risk and pressure. The shipping cost for a 40-foot container with 500,000 yuan (US$78,500) worth of goods was about 30,000 yuan, but now shipping costs have risen to 100,000 yuan while the value of the goods hasn’t changed.
“Costs for everything are rising domestically, but we can’t raise the price for our old clients, who are basically the only ones still doing business with us. You can imagine what we are going through.”