Road Logistics

Covid-19 Shipping Problems Squeeze China’s Exporters


HONG KONG—A logjam in the global shipping industry is testing the resilience of China’s exporters, who have driven the country’s economic recovery by churning out goods to meet surging global demand during the Covid-19 pandemic.

That demand in recent months has outpaced the capacity of a global shipping industry that has been slowed by pandemic safety measures. Chinese exporters have been paying sharply higher rates and struggling to find containers for their goods.

Chen Yang,

who runs a textile trading unit at a state-owned enterprise in the southern city of Hefei, said the business, which mostly exports to the U.S., has weathered the pandemic and the China-U.S. trade war, but he expects to lose money this year in part because of a sharp rise in shipping costs.

A 40-foot container arriving at the port of Charleston, S.C., in December cost Mr. Yang around $7,500, up from $2,700 in April, he said. He also has to book space on the vessel at least 20 days in advance, more than double the usual time.

Container ships moored near Guangzhou, China, in November.



Photo:

Qilai Shen/Bloomberg News

“I have never seen anything like this in my 18 years of experience as an exporter,” said Mr. Yang. “We’ve been operating at a loss since August.”

The problem has been aggravated by a worsening imbalance in global trade. In November, China logged a record trade surplus of $75 billion, fueled by strong consumer demand from Western countries ahead of the holiday season for everything from electronic gadgets to furniture and bikes.

Major U.S. ports imported 2.21 million 20-foot containers in October, up 17.6% from a year earlier and setting a record since the National Retail Federation began tracking imports in 2002. Container freight rates from Asia to the U.S. surged to a record in September and rates from Asia to Europe reached a 10-year high in December.

Pandemic-related safety measures have lowered efficiency at ports, leading to delivery delays and containers getting stuck all over the world. In November, only half of global carriers managed to stay on schedule, compared with 80% a year ago, according to a service-reliability index from Sea-Intelligence.

A logistics center near Tianjin port.



Photo:

sun yilei/Reuters

The average turnaround time for containers returning to China was up to 100 days in December from the more typical 60 days, according to the China Container Industry Association.

“The logjam is completely unprecedented, both in terms of the scale of the surge and the duration,” said Tan Hua Joo, a Singapore-based consultant at Liner Research Services.

While economists say that shipping problems haven’t derailed China’s solid recovery yet, they pose a challenge to sustaining the export growth that has driven it.

China’s official manufacturing purchasing managers index, a gauge of China’s factory activity, suggested that growth slowed in December. A subindex for new export orders edged down from the previous month to 51.3%, though still in expansion territory.

China’s rapidly appreciating currency, the yuan, which has risen more than…



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