Logistics Transport China to USA – China Yiwu’s foreign trade orders plummeted, Colgate switched to aircraft to transport toothpaste and toothbrushes, and a container to the United States cost nearly US $19000… When is the turning point of the global supply chain crisis?

Logistics China to USA – China Yiwu’s foreign trade orders plummeted, Colgate switched to aircraft to transport toothpaste and toothbrushes, and a container to the United States cost nearly US $19000… When is the turning point of the global supply chain crisis?

According to CCTV finance and economics, with the recovery after the global economic epidemic, “made in Yiwu” is flowing from China to more than 200 countries and regions every day. However, a global supply chain crisis has blocked the outflow of “made in Yiwu”, resulting in a sharp drop in orders of local foreign trade enterprises, overstock of inventory, tight cash flow and other problems. However, experts also pointed out that the high freight rate of containers may have ushered in an inflection point.

▲ experts say that the high freight rate of containers may have ushered in an inflection point, according to the network

How long will this supply chain crisis that makes global enterprises collectively “painful” last? What new challenges have the “anti globalization” in the crisis and the rise of the trend of nearshore production brought to the global industrial chain? Will it have a long-term impact on Chinese enterprises? In this regard, Mei Xinyu, a researcher at the Institute of international trade and economic cooperation of the Ministry of Commerce, made a professional analysis in an interview with red star news.

Orders of foreign trade enterprises in Yiwu plummeted

It costs nearly 19000 US dollars to send a container from China to the United States

According to CCTV finance and economics, since last year, the global container freight rate has continued to rise, and the quotation in the container market of some routes once soared to more than ten times. Yiwu, Zhejiang Province, is an important concentration of China’s foreign trade commodity export. The drastic change of container freight rate also has a great impact on Yiwu’s commodity export. Some goods can’t bear high freight rates. Many overseas buyers suspend orders and postpone or refuse to accept orders for some goods with low value. In addition, affected by the epidemic, many international merchants are inconvenient to travel, and the passenger flow in Yiwu Trade City is also much lower than before, resulting in a significant decline in the order volume of many stores this year.

▲ the picture of epidemic recovery hitting the global supply chain crisis was released according to Yiwu

Mei Xinyu, a researcher at the Institute of international trade and economic cooperation of the Ministry of Commerce, pointed out that the global supply chain is a problem that affects the whole body. The actual impact on Chinese enterprises is mainly in two aspects. First, the biggest impact is that after Chinese goods are produced, they have to be transported to customers for a long period of time, which has a great impact on trade. Second, some components needed by Chinese businesses can not be supplied in time.

Overseas enterprises at the other end of the supply chain are also suffering from it. The supply chain of 18 countries of Stanley Black & Decker, one of the top 500 companies in the United States, is facing a complete reset in this crisis. It is reported that the delivery time of Stanley’s products from Chinese factories to American stores this year has tripled compared with that before the epidemic, reaching nearly 90 days. In addition to the shortage of containers, the problems of port congestion, driver shortage and railway delay in the United States have also increased Stanley’s freight cost seven times. This is not the worst example. According to freightos index, a standard container full of clothes, toys, furniture or industrial accessories from China to Los Angeles now costs as much as US $18730, more than 13 times the price before the epidemic. In addition to the rise in freight and the extension of the cycle, American enterprises are also facing a shortage of computer chips and other accessories, affecting the production progress.

Don Alan, chief financial officer of STANLEY, said with emotion, “COVID-19 has fundamentally shaken the supply chain.” he pointed out that the crisis “illustrates the importance of the strategy close to the sales place. The shorter the product transportation time, the better your situation.” now, in order to cope with the most significant changes since the globalization process of the supply chain 30 years ago, Companies around the world are changing their strategies.

Colgate switched to aircraft toothpaste and toothbrush

“Eighteen martial arts” of enterprises in various countries to deal with the supply chain crisis

According to foreign media reports, many enterprises initially adopted some temporary measures to try to alleviate the supply crisis. Eaton, an industrial manufacturer, sent its own experts to fight side by side with suppliers; Colgate switched to more expensive air transportation for its toothpaste and toothbrush; Wal Mart charters its own ships to avoid delays.

▲ with the continuation of supply chain problems, enterprises began to seek more long-term measures. It has become a trend to use regional supply chain for “nearshore” production

However, with the continuation of supply chain problems, enterprises began to seek more long-term measures. It has become a trend to use regional supply chain and carry out “nearshore” production. Many overseas enterprises began to rewrite their “production manual”, change the traditional strategy of seeking low-cost supply and turn to new suppliers or different source countries, Use regional supply chain to ensure supply.

At present, some enterprises, including Ge, even directly redesign their products to reduce their dependence on some components and materials vulnerable to the impact of the supply chain. Honeywell monitors supply problems every day, and its engineers have also modified the design of sensors and fire protection systems to use more abundant computer chip components. In order to better cope with future supply chain emergencies, the company also developed a dual resource strategy for some products and signed long-term single contracts with key suppliers to ensure supply.

In addition, the soaring freight costs and unpredictable transportation conditions have undermined cross ocean logistics and shaken the previous dominant production theory – accessories arrive at the factory “on time” to complete assembly. Willy Shih, a professor at Harvard Business School, pointed out that manufacturers of complex products are now struggling with spare parts. They are saying to suppliers “I need more of this” every day. At the same time, they are hoarding due to shortage, “just in case, I need to prepare more”. However, when people hoard goods for “just in case”, it actually makes the shortage problem more serious.

The inflection point is coming? Dawn?

Expert: it will take some time for the freight rate to fall down. We can’t rule out the possibility of deterioration

When the crisis is making everyone anxious, experts pointed out that the high freight rate of containers may have ushered in an inflection point. The most tense time has passed, and now it has entered a process of gradual decline.

▲ Mei Xinyu said that in addition to the relationship between supply and demand, some of the reasons for the high freight rate of containers are speculative capital speculation.

In this regard, Mei Xinyu pointed out that the reason for the high freight rate of containers is not only the relationship between supply and demand, but also speculative capital speculation. At present, some freight rates have fallen, but the gradual decline process still needs some time. From the perspective of ship supply, logistics transportation and trade unions in western countries and importing countries, it will take some time for prices to normalize, and the possibility of further deterioration cannot be completely ruled out. At present, domestic foreign trade merchants need to ensure container supply and transportation as much as possible, and pay attention to avoiding exchange rate risk.

In addition, according to CCTV finance and economics, some industry experts believe that there are still a large number of backlog orders in China, and the loading rate of container ships is still high, so it is difficult for freight rates to fluctuate sharply in the short term. However, on the other hand, the marginal supply and demand of containers has eased, so it is necessary to be vigilant against the risk of freight rate diving caused by the downward loading rate in the future.

Can I ask where is the way?

“Reverse globalization cannot become a big climate”

Will the “anti globalization” and regional supply chain adopted by overseas enterprises become an inevitable trend in the future? Will it affect the layout of the global supply chain and even Chinese enterprises? In this regard, Mei Xinyu said, “without the full and sustained political intervention of major countries, anti globalization cannot become a big climate.”

Mei Xinyu believes that in the long run, the strategies adopted by overseas enterprises such as nearby production and reducing transportation are not effective. In the end, enterprises may find that their efficiency and supply are more affected than imports from other countries.

Soren Skou, CEO of Maersk, the world’s largest container shipping group, also pointed out that there is no huge return at present, because the real problem during the epidemic is not distance. “If you choose to go ashore and build your factory in Mexico or Eastern Europe, you are still vulnerable to the epidemic.”

In fact, this “anti globalization” shift is the result of the turmoil in the supply chain in recent years, including the trade war launched by the trump administration, a once-in-a-century global public health crisis, and extreme natural disasters that occur more frequently on all continents.

In fact, there is no perfect strategy to deal with supply chain problems, and regional supply can not solve all problems. Even if the domestic supply chain is 100%, the production of enterprises will be impacted by their domestic problems, such as the cold wave in Texas last winter or the destruction of railway bridges by wildfires in Australia.

Mei Xinyu believes that in the long run, some new methods can be considered for China’s logistics and transportation mode, such as domestic and foreign joint investment in the United States and Europe to buy appropriate ports and terminals, so as to ensure or even improve the efficiency of logistics and transportation. Spencer Shute, a supply chain consultant of Proxima company in Boston, predicted that enterprises will appear a “mixed” mode under the epidemic, and mix a more cautious and more costly “just in case” strategy in the traditional supply chain operation mode.

Fastest logistics Shippment From China To USA Less 15 Days , If you Let’s act as your freight forwarder and act as your agent to send container logistics from China to the United States