Since the second half of 2020, international shipping prices have been soaring. Taking the route from China to the western United States as an example, the freight for a 40-foot standard container has risen from around US$2,000 before the outbreak to a peak of US$20,000-30,000. Not only that, the impact of the epidemic at overseas ports has led to a sharp decline in container turnover rates. “Sky-high freight rates” and “hard to find a container” have been the biggest troubles for practitioners in the foreign trade industry in the past two years. This year, things have changed. After the Spring Festival, shipping prices have visibly dropped.
Recently, global container shipping prices have been adjusted, and freight rates on some routes have declined to a certain extent. According to the FBX index released by the Baltic Shipping Exchange, on May 26, FBX container shipping prices (mainly shipper quotes) continued the downward trend and averaged US$7,851 (down 7% from the previous period), which was higher than the historical high in September last year. , has fallen by nearly a third.
Among them, the freight rate of the China/Far East-North America West Coast route fell 45.9% from last year’s highest freight level to US$11,440/FEU (down 16% from the previous period), and the China/Far East-North America East Coast route fell 34.3% to US$14,570/FEU. FEU (down 9% from the previous issue), the freight rate on the China/Far East-North Europe route fell 29.7% to US$10,583/FEU (the same as the previous issue).
The fall in international shipping prices may be one of the rare good news in the field of foreign trade this year. But just falling freight rates will not solve the fundamental problem. According to feedback from merchants in Yiwu International Trade City, orders are currently mainly few and small in size. Analyzing the reasons, it is still the global economic downturn and sluggish consumption, resulting in shrinking transaction volume. On the other hand, rising raw material prices have also pushed up production costs. In addition, logistics difficulties caused by the epidemic in many places in China since March have made the situation even worse.
According to import and export data released by the General Administration of Customs, my country’s export growth rate in April was only 3.9% year-on-year, a sharp decline from the 14.7% growth rate in the previous month. In the Yangtze River Delta region, the import and export growth rates of Jiangsu, Zhejiang and Shanghai provinces from January to April all declined compared with the previous period. From an industry perspective, in labor-intensive fields, the export growth rates of textile products, furniture, and clothing have all fallen sharply. In April, the export value of mechanical and electrical products only increased slightly by 0.11% year-on-year, setting the lowest growth rate since June 2020. Among them, as Jiangsu’s traditional advantageous area of foreign trade, Jiangsu’s exports of mechanical and electrical products fell by 16% in April.
Fluctuations in freight rates and exchange rates, as well as the outflow of industrial chains and orders, all make foreign traders anxious.
With this round of epidemic under control and the early arrival of the shipping peak season, there are still phase risks in the demand rhythm and effective supply. Moreover, with the current balance of supply and demand still relatively fragile, market freight rates are likely to rebound. Therefore, market freight rates will remain high in the short term.
The weekly price index review of the “China Small Commodity Index” released by Yiwu Mall Group on May 20 pointed out that due to the tightening of epidemic prevention and control measures in surrounding areas, logistics and express delivery have been hindered. In addition, factories in epidemic areas have difficulties in starting operations and recruiting workers, and production orders have declined. The pace has slowed down, and the transactions of domestic and foreign trade orders in Yiwu market have declined to varying degrees recently. Among them, sales of low-consumption categories such as hardware tools, bedding, and office equipment have experienced retaliatory growth in 2021. Sales growth this year has been slow. April and May should have been the peak sales seasons for these industries, but overall sales have not seen a significant improvement so far. .
New direction for foreign traders: Since March, the export volume of some Southeast Asian countries has increased significantly. In addition, factories in Mexico and Turkey have also begun to significantly expand production capacity. my country’s export products, especially labor-intensive products, have seen a certain degree of order transfer.
According to an old foreign trader in Ningbo, this trend did not happen overnight, but has already started. The garment industry in which he works, whether in Southeast Asian countries or African countries such as Ethiopia and Egypt, has actually been completed to a certain extent. replacement for us. Capital will always look for cost depressions, and we should no longer have any expectations for this part of lost orders. He believes that my country’s industrial chain is more complete and its industrial foundation is stronger. How to make good use of these advantages is the key to breaking through the foreign trade industry. Instead of trying to “recover lost ground”, it is better to climb higher in the value chain to find and firmly occupy your own position.
Foreign trade companies build confidence in setting up factories overseas: Difficulties are real and opponents cannot be underestimated. Faced with a series of uncertain factors, how to deal with the situation has become the key to getting through this difficult time. Since the epidemic, shipping prices and raw material prices have skyrocketed, conflicts between Russia and Ukraine, and people’s��Exchange rate fluctuations, “cutting off” by rivals in Southeast Asia…many foreign trade companies have experienced almost all of the various “bumps” in the foreign trade industry. Among them, the rising cost of raw material prices is indeed a potential hidden danger. This, to a certain extent, resulted in some customers transferring their orders. The RMB exchange rate has experienced a round of ups and downs, which has also brought uncertainty to the business of export companies that need to make settlements and adjustments with customers on a regular basis. Foreign trade export companies say that more and more overseas customers are now leaning towards local procurement to avoid the impact of exchange rate fluctuations on trade. In this regard, some foreign trade companies have already made preparations to directly export their products overseas by building factories overseas.
my country’s foreign trade may continue to be tested for a long time to come. Take shipping prices, which have attracted much attention in recent years, as an example. Even though they have continued to fall this year, some analysts believe that with the arrival of the peak season and potential labor unrest at ports in the West United States, shipping prices may rebound again in the second half of this year. The protracted conflict between Russia and Ukraine, as well as a series of sanctions against Russia by the United States and the West, are also adding more variables to my country’s foreign trade industry. National and regional governments have also introduced relief measures one after another to tide over the difficulties with small and micro foreign trade enterprises.
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