Here are some of the top supply chain news stories happening right now.
China has been making some aggressive moves that are causing jitters in the industry. In an effort to increase its exports they’re offering much lower prices in many product categories, raising concerns in other countries and prompting them to take trade actions to protect their own industries.
Analysts estimate that China’s export prices have dropped by 20% in 2023. They attribute this to a combination of easing supply chain bottlenecks and aggressive discounting by Chinese companies hoping to maintain their market share in a time of weaker global demand.
China is dealing with overcapacity in many sectors, and the government has initiated subsidies for overseas sales trips and allowed the yuan to weaken against the US dollar. A weaker yuan makes Chinese goods less expensive for foreign buyers — helping to fill factories and stimulate their economy.
This has led the US to impose levies on tin-plate metal products coming in from China and to other countries, citing unfair pricing practices. Similarly, India is investigating the potential dumping of a range of Chinese goods, from chemicals to furniture parts.
Our take: The conversation about manufacturing moving out of China and the trend towards nearshoring will be ongoing. Regardless of where importers are sourcing from, it is important to work with your freight forwarder to understand the cost and transit-time impact of any changes you make to shipment origins.
The outlook is positive for the container shipping industry, at least at the Port of Los Angeles. A decrease in the port’s throughput deficit suggests that things may be returning to normal following the disruptions caused by the pandemic.
There are a few things supporting this positive outlook. First, the depletion of the excessive inventory built up during the pandemic and a stabilization of fluctuating freight rates — indicating a more predictable market environment. Reduced shipdelays at ports worldwide are a contributing factor as well.
However, challenges and uncertainties persist. The industry is still facing a threat of overcapacity, as the large number of vessels built during the boom years could lead to a glut in the market and negatively impact profitability. High interest rates and inflation raise the threat of a recession in 2024, dampening consumer demand and impacting the industry. Despite these challenges, experts remain cautiously optimistic about the future of the container shipping industry.
Our take: Perhaps this is a good sign the down-cycle in ocean shipping has arrived. Importers need to continually be aware of carriers’ attempts at limiting capacity with blank sailings and implementing GRIs as routing plans are made.
Inconsistent surcharges under the incoming EU Emissions Trading Scheme (ETS) have container shippers dealing with uncertainty and frustration. The implementation of the ETS has created concern due to the wide disparity in surcharges levied by different carriers. Not surprisingly, they question the rationale behind the discrepancies, particularly when similar voyages or cargo types are involved. A lack of transparency and consistency makes it difficult for shippers to plan their budgets and accurately price their goods.
Naturally, this has prompted calls for greater transparency and standardization in the application of EU ETS surcharges. Carriers are planning to recover costs through surcharges, but those charges aren’t consistent — leading to a fear that the surcharges won’t reflect the real cost of the ETS.
Our take: If you ship in or out of the EU, contact your forwarder to understand the potential surcharges you could be facing. How the fees are charged is complicated and there is no standards for how the ETS surcharges are being imposed.
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