Chinese Manufacturing Orders Drop as Consumers Pull Back on Buying

Chinese Manufacturing Orders Drop as Consumers Pull Back on Buying

The drop appears to be connected to economic uncertainty and not the migration of operations out of China

The Chinese manufacturing orders are reportedly down by around 20 to 30%, as per logistics sources responsible for moving finished products from manufacturing plants to ports in China, a report published on CNBC stated.

According to the report, the Chinese manufacturing orders are down by as much as 30% for some logistics companies as consumers shift spending to services.

The executive of a logistics major described the situation as a tipping point for the "ship at any cost" economy that has recently dominated in the U.S. amid high consumer demand.

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Vessel volumes continue to grow at U.S. East Coast and Gulf Coast ports including Savannah and Houston, according to the CNBC Supply Chain Heat Map, as labor talks on the West Coast threaten to cause more supply chain issues.

The drop appears to be connected to economic uncertainty and not the migration of operations out of China, an industry insider stated.

Even with this decrease in orders, the number of orders is still above pre-pandemic levels. This order decrease will have no impact on the current container volumes leaving China bound for the United States, the CNBC report stated.

A stakeholder opined that shipping volumes are not falling from a cliff but the ultra-high growth rates seen in recent times are moderating.

While there were some manufacturing shifts away from China under the Trump administration, with Vietnam, India and other countries benefiting, China remains the dominant sourcing locale for many products imported to the U.S, he added.

Logjams at Port of Ningbo-Zhoushan, the busiest in the world, has worsened the situation. Almost half a million TEU capacity is stuck at Ningbo is waiting for a berth, reports stated.

In the U.S., Savannah is seeing its worst days with an average waiting time of eight days before berthing.

Shanghai is still in various forms of lockdown so the expected surge of containers of finished products has slid further down the calendar. Once Shanghai fully reopens, the surge of containers will take six to eight weeks to arrive on the East Coast, the CNBC report read.

In addition to the container crush on the Gulf and East Coast, the West Coast ports continue to see an increase in vessel calls.

It has been argued by many in the logistics community that the ocean carriers reduced the number of sailings too much and created an artificial shortage of vessels and containers.

By eliminating the sailings, the amount of available space for a container was decreased, which drove up the price an importer had to pay to get their container on a vessel.

The canceled sailings also impacted the number of empty containers and the locations in which they were available. This also increased the price of the container itself. Down the line, these additional charges have fueled inflation, the report further stated.

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