Chinese manufacturing orders fall as consumers recall products

Workers work in a factory workshop in Huaying, Sichuan province, China.

fake images

Chinese manufacturing orders have reportedly dropped by as much as 20-30%, according to logistics sources responsible for moving finished goods from Chinese manufacturing plants to Chinese ports.

“As consumers shift from buying things to buying services, importers continue to work to balance order flow with sales expectations,” said Alan Baer, ​​CEO of OL USA. “Some industries are forecasting reductions in purchase orders of 20 to 30 percent, while others see no disruption to their order flow. Overall, the risk appears to be on the downside. The decline appears tied to economic uncertainty and not to the migration of operations outside of Porcelana.”

It is important to note that even with this decline in orders, the number of orders is still above pre-pandemic levels.

This decrease in orders will not impact current container volumes leaving China for the United States.

“Orders are now pretty normal after the close,” said Goetz Alebrand, director of Ocean Freight Americas, DHL Global Forwarding. “There are some raw materials missing for production and we also see more caution among some importer groups in booking. We see this as likely a sign of a turning point where the US economy is moving from ‘ship to any cost’ to ‘ship at a cost that our inventory can accommodate.’ … Shipping volumes are not falling off a cliff, but the ultra-high growth rates we have seen of late are moderating,” he added.

Alebrand said there have been some manufacturing shifts away from China that began under the Trump administration, with Vietnam and India among countries benefiting from a growing share, but China remains the dominant sourcing location for many products imported into the US. USA

One question that DHL Global Forwarding Americas is watching closely is whether Latin American countries will benefit from the change.

“Any significant change is not going to happen overnight,” he said.

Alex Charvalias, supply chain in-transit visibility lead at MarineTraffic, tells CNBC that Ningbo remains a hotspot.

“It’s a worsening situation in Ningbo with nearly half a million TEUs of capacity stuck waiting for a berth, indicating turnaround times will only get worse in the coming weeks,” Charvalias said. “On the US side, Savannah is experiencing its worst days with an average waiting time of 8 days before berthing. There is also no sign of relief there with four times the TEU capacity waiting outside the port, compared to the total capacity of TEU that the port has capable of serving at any time”.

Shanghai is still in various forms of lockdown, so the expected increase in containers of finished goods has fallen further behind schedule. Once Shanghai fully reopens, it will take six to eight weeks for the wave of containers to reach the East Coast.

container crushing

Vessel volumes continue to grow along the US East Coast and Gulf as logistics managers try to avoid West Coast congestion and fears of a West Coast port labor strike while the International Longshore and Warehouse Union and the Pacific Maritime Association continue to negotiate.

“It’s definitely a two-coast story in the US,” said Adam Compain, senior vice president of Supply Chain Insights. “Carriers have increased their network of services on all sea lanes from China to the US East Coast in an attempt to get closer to the market and avoid congestion at Los Angeles/Long Beach and inland multimodal links. But the increase from 19 vessel services per month in 2020 to nearly 30 per month is now still causing serious challenges for ports on the East Coast.”

Even with the increase in vessels, the wait time for import containers outside the Port of Houston is the shortest of all ports tracked by this week’s US Supply Chain Heat Map. From January to March, containers increased by 22%. Year-to-date (May), containers overall are up 20%.

“While the number of container ship arrivals at the Port of Houston and Port of Savannah continues to increase, this is likely to add to existing vessel counts at anchorage and may cause excessively long vessel hold times,” said Mirko Woitzik, director of intelligence solutions at Everstream. Analytics. “The port of Savannah is the most notable, with 108 vessels expected to arrive over the next two weeks. Looking back, the average number of container arrivals at the port was 35 per week since January 2022. We can expect delays in Savannah “.

In addition to the crushing of containers on the Gulf and East Coast, West Coast ports continue to see an increase in ship calls. The Port of Los Angeles, in anticipation of this increase, has been trying to empty containers for more efficient processing. But Gene Seroka, executive director of the Port of Los Angeles, warned that the rail situation is not improving and containers bound for the rails continue to pile up.

“Railway operations continue to be our biggest and current challenge,” Seroka said. “We have over 29,000 containers on the ground right now in Los Angeles, of which 15,000 are aged nine days or more. In more normal times over the same time period, we would have 9,000 containers on the ground and none more than nine days and medium”. days.”

Freight Cost Factors

Labor negotiations in Europe

The labor struggle in the five ports of Germany continues.

Andreas Braun, Ocean Product Director EMEA for Crane Worldwide Logistics, said the unions and the port plan further talks on June 21. “That does not mean that a short warning strike will come before to support the union negotiations as we saw last In Antwerp, the 24-hour general public strike on Monday will not improve the situation,” said Braun.

Peter Sand, chief analyst at Xeneta added: “It is too early to see if the ships en route will miss calling ‘North Germany’, we will have to see. What is more worrying is that the containers end up in the wrong place, and the Local feeder networks also can’t do magic in getting boxes to congested ports.

In addition to the threatened strike on the German, the UK will have a rail strike this week.

“It is very likely that this strike will affect passengers, but surely also the cargo that moves on the railways,” explained Sand. “Some operators are reluctant to offer long-term contracts with the UK destination,” she added.

A British union, the Transport Salaried Staff Association (TSSA) has warned of a “summer of unrest” as they dispute wages, working conditions and job security.

CNBC Heat M’s Supply ChainaThe data providers p are artificial intelligence and predictive analytics company Everstream Analytics; the global freight booking platform Freightos, creator of the Freightos Baltic Dry Index; logistics provider OL USA; the FreightWaves supply chain intelligence platform; Blume Global supply chain platform; third-party logistics provider Orient Star Group; marine analysis firm MarineTraffic; maritime visibility data company Project44; shipping data company MDS Transmodal UK; the comparative analysis company for sea and air cargo Xeneta; leading provider of research and analysis Sea-Intelligence ApS; Global logistics crane; and air, DHL Global Forwarding and freight logistics provider Seko Logistics.

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