Steve Chuang’s Hong Kong-based electronics manufacturing company has enjoyed steady demand from the United States and Europe over the past year. But, like many Asian exporters, it struggles to get its products to customers.
Chuang’s business, which makes solar-powered electronics, is just one of many companies benefiting from a business boom that has helped the regional economy rebound from the year’s pandemic slowdown. last.
But their success is held back by disruption of global shipping supply chains. The surge in exports from China to the west, combined with disruptions at ports due to the coronavirus, has left many containers out of position, leading to queues of ships outside ports and skyrocketing freight rates. Chinese media dubbed him “a single box is hard to find.”
The amount it costs to send a 40-foot container from China to the United States has more than quadrupled last year, said Chuang, “We have never seen anything like this in the past two decades. . . Empty containers cannot return to Hong Kong. “
China has recovered from the pandemic faster than any other major economy, and its exports of lockdown-related goods, electronics and medical equipment have soared.
Export volumes have grown at double-digit rates for several consecutive months, and at the end of last year, China’s trade surplus hit a record.
But the increase in demand for its products comes as pandemic-related restrictions and understaffing at U.S. and European ports delay the return of containers to Asian ports from the United States. Is.
Roberto Giannetta, president of the Hong Kong Liner Shipping Association, said the lack of truckers and warehouse workers elsewhere in the world is inhibiting the ability of ports to return containers to China.
“There are a lot of containers right in the middle of nowhere. . . Australia, Eastern Europe, Central America, ”he said. “It’s like some kind of perfect storm preventing containers from going back to Asia.”
Hu Haoli, assistant to the chairman of Wanlong Chemical in Wenzhou, said freight rates remain high, although it only had a limited impact on his business because the products he sells are high-end.
But for other companies, especially China’s vast textile industry, the delays have a more serious effect. An exporter from Shaoxing, a city on China’s east coast, said the sharp rise in freight rates in December caused many textile companies to shut down.
Shipping officials had hoped that the traditional factory closures that usually accompany the Lunar New Year would slow production volumes, giving shipping companies a chance to catch up. But those hopes did not materialize – some Chinese factories urged employees to continue working during the holidays in an effort to keep pace with global demand.
Delays and shortages risk driving up commodity prices. In Hong Kong, Chuang said he faces shipping delays of two to four weeks and his company is negotiating with customers to share the costs, which has increased the price of its products by 2-5%. .
Having so far mainly affected routes outside Asia, there are signs that the container shortage is starting to trickle down to the return journey, hitting companies that import into China. In January, McDonald’s in Hong Kong announced that the delays had disrupted its supply of hash browns. There was also a brief shortage of peanuts for sundaes.
Ports are scrambling to find more containers to help alleviate shortages. For example, in Ningbo, a large facility in China’s Zhejiang Province, authorities recently helped to 730,000 empty containers.
John Fossey, head of container equipment and leasing research at Drewry, a marine research consultancy, said shipping container production fell year on year in the first half of 2020, although ‘it increased in the second half of the year, increasing total production by 10 percent over the full year.
But these new containers will cost more: Due to growing demand, combined with rising costs for raw materials such as steel, the price of a new container to be delivered this summer is now around $ 6,200, its price being around $ 6,200. highest level ever recorded, according to Fossey. This “may dissuade several owners from contracting new equipment,” he warned.
While some reports from China indicate improve the activity of its ports In recent weeks, other players in the maritime sector remain pessimistic about the outlook for the coming months. Willy Lin, chairman of the Hong Kong Shippers Council, believed there would be “no relief” until the summer at the earliest.
He pointed to the growing likelihood that manufacturers could turn to overland trade routes, especially by trucking from Guangxi Province in southern China to Vietnam and Southeast Asia. Chuang said some companies are looking to export to Europe overland through Russia.
Meanwhile, Asian exporters are working to secure the shipping space.
“Almost every ship available in the world is in use at the moment, because there are so many ships that are just sitting there. [at ports] waiting to be unloaded, ”said Giannetta.
Additional reporting by Wang Xueqiao in Shanghai