China’s shipping insiders brace for another full year of rising freight rates having a ‘profound impact on trade’

Some exporters continue to stockpile goods in warehouses as cash flow dwindles, while others endure higher shipping rates amid supply-chain disruptions

Despite fretting exporters, China’s foreign trade performance beat expectations in November, with an 8.4 per cent growth in exports over the previous month

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Port congestion has led to global container shortages, and the resulting high prices are weighing heavy on China’s commodities exporters. Illustration: Henry Wong

Published: 10:00pm, 19 Dec 2021

Surging shipping costs in a year riddled with supply-chain disruptions are straining China’s small commodities exporters, and industry insiders are bracing for more challenges to come as they say high freight rates could stretch into 2023.

Jiang Tianqing, an exporter from Yiwu, Zhejiang province, said many of his clients have dropped orders due to the high shipping costs. He is also struggling to maintain adequate cash flow, as his goods such as mirrors and combs are low added-value items that return slim profits.

“Everyone is in a difficult position,” Jiang said. “The intensity of the blow depends on their capacity to weather and manage risk and pressure. The shipping cost for a 40-foot container with 500,000 yuan (US$78,500) worth of goods was about 30,000 yuan, but now shipping costs have risen to 100,000 yuan while the value of the goods hasn’t changed.

“Costs for everything are rising domestically, but we can’t raise the price for our old clients, who are basically the only ones still doing business with us. You can imagine what we are going through.”

To keep abreast of the market changes and broaden his client base, Jiang also started an e-commerce shop on Alibaba’s international site. Alibaba owns the South China Morning Post.

“This way I can wholesale while retailing as well, and they will normally transport by air,” he said. “It’s more expensive this way, but compared with the price of a 40-foot container, individual customers will find it acceptable. I can also broaden the market for my products this way. Foreigners can’t come into China now anyway, and many people overseas are increasingly shopping online.”