BUSINESS Christmas decorations exported from China face delays due to shipping bottleneck

BUSINESS

Christmas decorations exported from China face delays due to shipping bottleneck

CGTN

16:41, December 12, 2020

File photo: agencies

Christmas is just around the corner, but you may be wondering why festive trees and decorations are taking a little longer to arrive on your doorstep.

Your Christmas tree or decorations could be sitting in all this stuff at a warehouse in Shanghai. But instead of being delivered to your home in New York or Paris, it's now piling up here. Why is this?

The reasons are actually quite simple. It all comes down to containers being in short supply.

There were once over 20,000 containers in stock at this warehouse, but the number has been reduced to about 6,000 due to reduced productivity at foreign ports caused by the pandemic and lockdowns.

In an area that used to be piled high with containers, now there are about 100,000 square meters of the site sitting empty.

As a result, shipping costs are rising. It currently costs over $5,000 to ship a container from China to the UK, up 300 percent from March.

"Shipping companies can't keep up with so many orders in such a short space of time. So they increase shipping costs to maintain transportation capacity. But even so, demand for China's exports remains very high," said Garrisun Ge, president and CEO of the Amass Global Network Group.

But for Chinese exporters, higher shipping fees are only one of the obstacles. China's yuan strengthened to 6.5 against the U.S. dollar in November, from about 7 in May.

"If you're an exporter and you signed a one-million-dollar contract in August when you deliver products in November, it will incur a loss of half a million RMB just because of yuan appreciation," said Wang Dan, chief economist at Hang Seng Bank.

Fast-rising prices on raw materials are also putting extra pressure on profits.

And experts say the biggest problem for exporters is accessing cash. "Before they get money from buyers in foreign markets, there needs to be some sort of liquidity injection, either from government or from financial platforms through monetary lending," said Wang.

For those also affected by trade imbalances, such as international logistic firms, shifting focus to the domestic market is one of their key strategies.

"We are ready to concentrate on domestic circulation. We've been researching and working to promote the domestic logistics service of China's self-made products in many areas across the country," said Ge.

Experts say the lack of containers will last into next March, and possibly longer. This is likely to put extra pressure on exporters, as demand continues to rise with every passing month.

As Christmas draws near, don't be too anxious if your goods don't arrive. After all, the holiday season is about more than just a tree.

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