US economic woes damper July 4 fireworks, further impact expected: Chinese industry insiders
Global Times

Containers are loaded on barges at a port in Jiaxing, East China's Zhejiang Province on June 16, 2022. (Photo: Courtesy of Ningbo Zhoushan Port Group)

A slew of economic woes in the US, including supply chain issues and sky-high inflation, have put a damper on the US' traditional celebrations of its Independence Day on July 4, as fireworks shows have been canceled in many US cities and Chinese fireworks producers, which supply about 90 percent of the US market, reported issues such as high production and transportation costs and delayed shipments at US ports.

Though US demand for fireworks has rebounded, with some Chinese companies seeing a 40 percent increase in orders from the US ahead of holidays. But with the lingering challenges, companies are having a hard time meeting the needs from the other side of the Pacific, Chinese businesses told the Global Times on Monday.

In Liuyang, Central China's Hunan Province, the major production and trade hub of the domestic fireworks industry, several companies said they have been working around the clock to meet the demand from the US.

Zhong Fang, a manager at Dancing Fireworks, a local firework supplier, said they have been working around the clock for months and the orders are already piled up for the next two or three months.

However, there are several challenges for getting the fireworks to the US. The congestion situation at some US ports adds to the instability, and together with potential port strikes, no one can predict delivery times at all, Zhong said.

Meanwhile, the soaring price of raw materials for making fireworks such as potassium perchlorate due to the Russia-Ukraine conflict and the low-efficiency at some US ports all pose challenges to the firework supply chain, an industry insider said.

As a result, freight rate between China and the US has been surging. The current freight rate for fireworks is around $38,000 per 40-foot container, but it used to be just around $8,500 in previous years, the insider said.

Chinese firework factories are also about to pause production in July and August, as government regulations for production safety mean all production activities must be stopped, insiders said, indicating a possible further delay in order-taking.

In recent years, sales of fireworks have surged. Since July 2021, exports to the US increased by more than 40 percent year-on-year, according to Wen Guanghui, president of the Export Branch of Liuyang Fireworks and Firecrackers Association.

However, as US inflation has put more pressure on the supply chain, there are growing uncertainties for exports this year and next year, Wen told the Global Times on Monday.

"Last July, pre-orders for this year's sales season [July 4, 2021-July 4, 2022] were fully booked already, but there are few orders for the next sales season from the US," Wen said.

Moreover, "the shipping cost has now exceeded the price of the product itself, and because of the increase in shipping costs, the retail price for fireworks in the US may rise by more than 30 percent," he said.