Posts

china usa

China-US trade war won’t affect global container supply chains

The trade dispute between the US and China could have fewer ramifications across global container supply chains than initially thought.

According to new research from Drewry, although the transpacific trade, particularly headhaul eastbound, is expected to be hit hard by the introduction of billions of dollars’ worth of new tariffs, the way China has established itself as the world’s factory means other trades should be less affected.

“Potential losers in this trade war will be those countries that provide the raw materials and semi-finished goods to China that go into the re-export of the final products to the US,” said the analyst. “The US itself could suffer as China uses up some of its exports for re-exports.”

It added: “The thing is that China has developed its manufacturing capacity to such an extent that it barely needs inputs from the rest of the world to support its exports, which should limit the collateral damage.”

Drewry explained that the tariffs were likely to increase demand for manufacturing in countries other than China, which, due to the way many production processes typically involve several tiers of manufacturing with intermediate goods also being shipped around the world, container lines could actually see a volume fillip on other trades from the dispute.

“As final goods sourcing moves to countries currently without the same manufacturing eco-system as China, they will require more intermediate inputs, meaning more production fragmentation.

“Where those links establish themselves will determine how beneficial the process is for shipping lines. More intra-Asia trade will boost demand for shipping services and put a greater onus on smaller feeder ships, whereas greater regional trade in North America and Europe would be less advantageous due to overland opportunities,” it said.

“There will be some short-term disruption to the container market as new trading links are developed, but further fragmentation of production will boost the need for shipping, assuming demand levels are sustained. For the foreseeable future, China will remain the world’s container export hub, albeit a slightly smaller one,” it concluded.

And a senior freight forwarding executive told The Loadstar at the recent Transport Logistic show in Munich that the trade dispute could present a boon for forwarders willing to help shippers design their supply chains.

Essa Al-Saleh, chief executive of Agility, said: “Trade will follow the path of least resistance. People will find other opportunities. Some movements are opportunistic because of trade barriers, some are more long-term, based on labour, regulations or a combination of both.”

“Global supply chains are becoming more complex – there are lots of locations that can add more value, and there are some trends towards making supply chains shorter, some of it due to cost, or predictability.

“Costs are going up in China, but they have built a great ecosystem, that gives it a certain stickiness, so it’s hard to move out. Tariffs will have a negative impact on Mexico. Forwarders don’t just offer port-to-port; it’s end-to-end, and they can add value and service in between.

“You need agility and resilience in the supply chain – products may shift, or there may be quotas – the key thing is to understand the pain point: forwarders are always in demand, it’s never all doom and gloom; it’s about engagement with clients,” he explained.

Source: The Loadstar

china usa

U.S. begins collecting higher tariffs on Chinese goods arriving by sea

The United States began collecting higher, 25% tariffs on many Chinese goods arriving in U.S. seaports on Saturday morning in an intensification of the trade war between the world’s two largest economies and drawing retaliation from Beijing.

U.S. President Donald Trump imposed the tariff increase on a$200 billion list of Chinese goods on May 10, but had allowed a grace period for sea-borne cargoes that departed China before that date, keeping them at the prior, 10% duty rate.

The U.S. Trade Representative’s office in a May 15 Federal Register notice set a June 1 deadline for those goods to arrive in the United States, after which U.S. Customs and Border protection would begin collecting the 25% duty rate at U.S. ports. The deadline expired at 12:01 a.m. EDT on Saturday

The tariff increase affects a broad range of consumer goods, and intermediate components from China including internet modems and routers, printed circuit boards, furniture, vacuum cleaners and lighting products.

Earlier on Saturday, China began collecting higher retaliatory tariffs on much of a $60 billion target list of U.S. goods. The tariffs, announced on May 13 and taking effect as of midnight in Beijing (1600 GMT), apply additional 20% or 25% tariffs on more than half of the 5,140 U.S. products targeted. Beijing had previously imposed additional rates of 5% or 10% on the targeted goods.

No further trade talks between top Chinese and U.S. negotiators have been scheduled since the last round ended in a stalemate on May 10, the same day when Trump announced higher tariffs on $200 billion of Chinese goods and then took steps to levy duties on all remaining Chinese imports.

China ordered the latest tariff increases in response to Trump’s move.

Trump has accused China of breaking a deal to settle their trade dispute by reneging on earlier commitments made during months of negotiations. China has denied the allegations.

Beijing has grown more strident in recent weeks, accusing Washington of lacking sincerity and vowing that it will not cave to the Trump administration’s demands.

Its rhetoric has hardened particularly since Washington put Chinese company Huawei Technologies Co Ltd on a blacklist that effectively bans the firm from doing business with U.S. companies.

Source: Reuters.com

China flag

China-Europe rail service exports grow by 106%

China’s Belt and Road initiative (BRI) may have faced recent strong criticism from the EU, but that has not dented the growth in its exports to Europe.

Chinese officials have claimed a 106% increase in the value of cargo travelling by rail from China to Europe, equating to some $33bn.

Xiao Weiming, from the office of the leading group for promoting the BRI, told Xinhua that 14,691 trips have been made by China-Europe freight trains since 2011.

Operator United Transport And Logistics Company Eurasian Rail Alliance (UTLC ERA) recorded a 54% (62,622 teu) upturn in volumes between China and Europe.

While the bulk is exports from China (35,536 teu, up 69%), imports from Europe have been closing the gap, recording a 44% increase to more than 27,000 teu in Q1.

The Russian-Kazakh-Belarussian-owned UTLC ERA has furthered its links between the two regions, having announced cooperation agreements with two European partners.

President of UTLC ERA Alexey Grom said: “I am perfectly confident the agreements signed with our partners will contribute to the active growth of the transit transportation market, enabling UTLC ERA to strengthen its leading positions in cargo shipments on Europe-China-Europe routes.”

During this month’s TransRussia exposition the operator entered an agreement with Slovakia’s public rail company, ZSSK Cargo, to facilitate IT collaboration on container shipments from China, to include route scheduling and an analysis of potential customer bases between Slovakia and China.

“This is the first time we have fixed in writing the intention to build a direct transit transportation technology process,” said Mr Grom. “We will be solely responsible for the 1520 gauge, whereas ZSSK Cargo will be in charge of the 1435 gauge.

“That is how we will be able to offer our customers the end product – a comprehensive shipping service solution.

UTLC ERA has also announced a deal to assist Lithuanian Railways with its postal container traffic from China to Lithuania, providing containers loaded with postal items at Dostyk and Altynkol stations, operated by Kazakhstan Railways.

Lithuanian Railways would then take over handling at Kena near Belarus, delivering packages to the warehouses of Lietuvos Pastas, Lithuania’s public postal service.

Despite the BRI’s growth, a report from EU high representative for foreign affairs and security Federica Mogherini slammed China’s handling of the trillion-dollar project, describing Beijing as both a partner and a strategic competitor.

Those words may have little impact on the BRI’s momentum, with the project now boasting the involvement of more than 120 countries. Its development was enshrined in the Chinese Communist Party’s constitution in 2017, but cracks have begun to show.

According to the Asian Development Bank, a $26trn investment shortfall between now and 2030 looks likely, while at home the Chinese have expressed concerns over a litany of faults.

Source: The Loadstar

 

China flag

Faster speed and lower costs – why has the China-Europe rail line been such a success?

Increased speeds and falling costs could see the China-EU land bridge handle more freight, some 2m teu a year, while IMO 2020 has the opposite effect on sea freight.

Head of Russian Railways Oleg Belozyorov told delegates at the International Railway Congress in Vienna that new projects would boost transit times and create a better service for shippers.

“A few years ago, we could only speculate that around 600,000 containers would travel through Russia. Now, this has been achieved. We have seen an increase of an additional 30% on the previous year. We could reach 2m teu a year or more,” he said.

With trade between China and the EU worth some $5trn, Mr Belozyorov pointed out that the two economies were now connected via the land bridge – but the service could be improved, he believed.

Russian Railways plans to reduce transit time from China to the western border of Russia to seven days, while increasing the speed of the trains so they can cover 1,500km a day, up from 1,150, following the completion of infrastructure projects.

He added that construction of the 1,520mm gauge Košice-Bratislava-Vienna railway line would also add efficiencies.

“This project will bring the work of the railways to a new level,” said Mr Belozyorov. “We will try new technologies to speed up border crossings and unify legal issues. We need to focus our attention to ensure that it takes place as soon as possible.”

But he also called for “a unified regulatory framework”.

“Much has been done as part of the International Union of Railways, but more work is necessary. We need to quickly cross borders. We can cover long distances quickly, but the cargo sits at the border under customs clearance two whole days,” he said.

One way would be to increase training and add new technologies, he argued.

“We are accustomed to traditional railway professions, and we need to create new professions based on the use of new digital technologies. These will be the real railway workers of the future,” he said.

Another key aspect would be digital technologies,

“Tools such as blockchain and smart contracts can allow us to make decisions in a matter of seconds and save billions of dollars.”

Rail is gaining more traction in the market, with its combination of speed and price attracting some shippers. Last year, costs fell, while speed increased, according to a Drewry report.

2018 saw 370,000 teu transported by rail between China and the EU, up 35% on a year earlier. Some 75% of that was routed via Kazakhstan, with gross transit volumes up 59% as the number of trains grew as well as the number of containers per train. The imbalance also improved – there was a 90% increase in eastbound trains compared with a 37% increase in westbound trains.

Drewry also noted that the rates were less volatile than in ocean freight, and that costs had fallen.

Sea freight, meanwhile, is expected to see a significant rise in costs following the implementation of IMO 2020 fuel regulations, while ships are also expected to opt for more slow-steaming. Rail costs, however, will fall while speed increases.

china usa

U.S. and China Near Deal That Could End Most U.S. Tariffs

The U.S. and China are close to a trade deal that could lift most or all U.S. tariffs as long as Beijing follows through on pledges ranging from better protecting intellectual-property rights to buying a significant amount of American products, two people familiar with the discussions said.

Chinese officials made clear in a series of negotiations with the U.S. in recent weeks that removing levies on $200 billion of Chinese goods quickly was necessary to finalize any deal, said the people, who weren’t authorized to talk publicly about the deliberations. That’s the amount the Trump administration imposed after China retaliated against the U.S.’s first salvo of $50 billion in tariffs that kicked off the eight-month trade war.

One of the remaining sticking points is whether the tariffs would be lifted immediately or over a period of time to allow the U.S. to monitor whether China is meeting its obligations, the people said. The U.S. wants to continue to wield the threat of tariffs as leverage to ensure China won’t renege on the deal, and only lift the duties fully when Beijing implemented all parts of the agreement.

As part of the ongoing talks, the U.S. asked the Chinese not to retaliate or bring World Trade Organization cases in response to U.S. tariffs that could be imposed to enforce the deal, according to a person familiar with the negotiations.

Stocks in Europe and Asia advanced on optimism about a deal, with the Stoxx Europe 600 Index rising 0.4 percent. The offshore yuan gained 0.2 percent.

Dates for a summit between President Donald Trump and counterpart Xi Jinping have yet to be agreed, according to officials from both countries who declined to be named. The Wall Street Journal, which reported earlier that the U.S. and China were close to finalizing a trade pact, reported the summit could happen around March 27.

Plans for a signing ceremony have been complicated by Xi’s need to lead China’s annual National People’s Congress and to make other foreign trips.

U.S. and Chinese officials “have conducted fruitful and intensive consultations and made important progress on many issues of common concern,” Zhang Yesui, a spokesman for the National People’s Congress, the annual session of China’s legislature, told reporters in Beijing on Monday. “We hope that the two sides will continue to hold consultations and reach a mutually beneficial and win-win agreement,” he added.

China’s Offer

China is offering to lower tariffs on U.S. farm, chemical, auto and other products, the Journal said, citing people familiar with the situation. Specifically, China would buy $18 billion in natural gas from Houston-based Cheniere Energy Inc., one of the people familiar with the matter said.

As part of a deal, China is pledging to speed up the timetable for removing foreign-ownership limitations on auto ventures, and to reduce tariffs on imported vehicles to below the current rate of 15 percent, the newspaper reported.

A senior administration official cautioned on Sunday that a decision had not yet been made over lifting the U.S tariffs. The official also said a debate was continuing inside the administration with Trump unlikely to make a decision before a deal was closer to being done, likening to situation to the debate over what to do with U.S. sanctions in the lead-up to last week’s summit with North Korea’s Kim Jong Un.

Asked during a congressional hearing last week whether a deal would see a lifting of U.S. tariffs, Robert Lighthizer, the China hawk now leading the talks with Beijing, would say only that was China’s desire.

Source: Bloomberg.com

china usa

China-US trade war tariffs force manufacturing moves

The failure of the US and China to agree on trade at the weekend makes further tariffs on Chinese goods to the US seem increasingly likely.

But while most economists agree that trade wars are ineffective and harmful, some players in the logistics industry are seeing opportunities – mostly in air freight, which typically benefits from chaos and change.

The likelihood of 25% tariffs on a wide range of goods has seen the ocean freight industry surprisingly busy in the past couple of weeks, as exporters look to move goods to beat the 1 January deadline.

But ultimately, shippers and logistics service providers are looking to new manufacturing possibilities – and therefore supply chains – in South-east Asia.

Large numbers of US companies are talking of shifting manufacturer. Robert Rucker, CEO of The Tile Shop, said in an October earnings call: “With the Chinese tariffs, we are looking at moving. And right now: we’re at roughly 50% of our product coming out of Asia, my goal is to get that closer to 25% or even lower, and the potential for doing that right now is very good. We’re not waiting.”

James Simms, CFO of Vicor Corp, said in his earnings call: “The cost, going forward, may not be inconsequential, given the volume of components currently sourced from China. We are seeking non-Chinese alternate vendors.”

And Todd Bluedorn, CEO of Lennox International: “I’m not sure the Chinese tariffs are going to be short term. And so we’re taking action to sort of avoid the tariffs by moving to South-east Asia and other low-cost countries that can meet our requirements.”

It will take a while for companies to build new supply chains, and in the meantime carriers are already benefiting.

“It is the peak for China to the US, but it’s compounded by tariffs,” said Robert van de Weg, vice president sales and marketing for Volga-Dnepr Group. “There is a build up.

“A lot of this inventory was supposed to go by ship, but it’s going by air to be on time.

“If tariffs have a general effect on the economy and trade flows, there will be some change before it settles down into the new equilibrium.”

The question for carriers will be when to add capacity – and to where.

“South-east Asia could see new trade flows, Cambodia, Malaysia, Vietnam, Indonesia and Bangladesh,” said Mr van de Weg. “There will be more opportunities out of South-east Asia and a degree of chaos, as the supply chains won’t be ready. Plus, factories will have to move. However, I don’t believe the change will be sharp and sudden.”

AirbridgeCargo (ABC) is the V-D group’s Asia specialist and is currently looking at developing its South-east Asian network.

“We are looking at increasing the frequencies and maybe opening new markets. You don’t want to be too early, you don’t want to be too late. Don’t miss the boat, but don’t lose your shirt. You need to be prepared to go in. Increasing frequencies to existing points is the first step.”

ABC currently operates to Ho Chi Minh, Hanoi, Singapore and Taipei.

Mr van de Weg added: “Bangladesh is interesting. We have made progress on ACC3 certification there. We also think Indonesia and Thailand have potential. There is more and more infrastructure and more overland networks with Cambodia and Vietnam, and there is also a strong import market.”

Air freighter volumes appear to be rising in the region, with Thailand seeing international volumes this year above the market average growth, at more than 6%.

Cambodia’s Phnom Penh saw 24% growth, year on year, in cargo volumes in September. The Vietnamese civil aviation authority is forecasting 18% growth annually in freight volumes each year up to 2020.

Source: The Loadstar

China flag

China to ban the recycling of international ships

China plans to stop allowing the recycling of international ships at its yards as of the beginning of 2019.

The decision comes on the back of China’s efforts to crack down on polluter and waste producing industries in the country, which have seen many yards denied their ship recycling licenses.

The Chinese-flagged ships will be allowed to continue to be dismantled at Chinese yards, however, the Government of China will no longer provide subsidies for the branch, as decided last year. Due to such a turn in policy, local owners are likely to look elsewhere to retire their ships, including India.

“In view of this, owners will have to succumb to the fact that, with the exception of Turkey, the H.K Convention approved recycling yards in Alang will have to be taken more seriously following the incredible improvements that have been made at these yards over many years and the fact that these yards now can only offer owners the only alternative at this current time for green recycling,” Clarksons Platou Shipbroking said.

Two years ago, industry leader Maersk committed to investing in Alang yards and boosting their operational standards to comply with the company’s requirements.

Chief Executive Officer of  A.P. Møller – Mærsk A/S, Søren Skou, said recently that some yards in Alang, India, are performing at the same level or better than yards in China and Turkey, “which used to be the only options for economically viable and responsible ship recycling. “

Explaining its approach, Maersk said that the company helps the yards to upgrade their practices while contractually requiring full implementation of its standards controlled by on-site supervision throughout the process as well as quarterly audits by third parties.

Even though the situation is far from perfect, especially when it comes to health hazards at the shipbreaking yards in Alang, Maersk believes that helping the yards to improve their standards is an opportunity to change the industry for the better.

However, for a more sustainable progress to be made more shipowners need to become involved.

From a total of 206 ships, which were broken in the first quarter of 2018, 152 ships were sold to the beaches of South Asia for breaking, according to NGO Shipbreaking Platform.

Despite a considerable improvement made by some shipbreakers, a great majority of south Asian yards are notorious for their poor environmental and healthy and safety practices.

It is quite common for workers to suffer serious injuries or even get killed due to exposure to various types of risks ranging from falling objects to intoxication.

So far this year, 10 workers have lost their lives and 2 workers have been severely injured when breaking ships in Chittagong, Bangladesh. Another two workers were reported dead after an accident at a shipbreaking yard in Alang, India, data from NGO Shipbreaking Platform shows.

Source: World Maritime News

canton fair

We are attending the Canton Fair

Supreme Freight Services LTD are excited to announce that we will be attending this years Canton Fair. (Also known as the China Import and Export Fair).

Canton Fair is a comprehensive international trading event with the longest history, the largest scale, the most complete exhibit variety, the largest buyer attendance, the broadest distribution of buyers’ source country, the greatest business turnover and the best credibility in China. It is renowned as “China’s No.1 Fair”.

It was established in 1957 and is held every spring and autumn.  It boasts an exhibition area of 1.18 million m² per session, with 150,000 exhibit varieties in 16 industries, and the number of exhibitors from home and abroad stands at nearly 25,000.

In each session, about 200,000 buyers attend the Fair from more than 210 countries and regions all over the world.

The Canton Fair Schedule is as follows:

Phase 1 (April 15-19, October 15-19):
Electronics, lighting equipment, vehicles & spare parts, machinery, hardware & tools, construction materials, chemical products, energy resources, and international pavilion

Phase 2 (April 23-27, October 23-27):
Consumer goods, gifts, and home decorations

Phase 3 (May 1-5, October 31-November 4):
Textiles and garments, shoes, office supplies, cases and bags, recreation products, food , health products and medical devices.

The fair is held at:

382 Yuejiang Zhong Road, Guangzhou, China

Clients can meet with our team face to face discuss their shipping requirements.  We can also offer help and advice and information for travel, accommodation & a local complimentary taxi service. We look forward to meeting as many of our existing clients as possible as well as any potential new clients. Please come and find us at the fair, and contact us if you need any help or information beforehand.

For more information please visit the Canton Fair website:

http://www.cantonfair.org.cn/en/index.aspx

polar silk road

China longing for a Polar Silk Road

Following on from their Silk Road direct link, China are now looking to capitalise on a Polar version.

The first silk road train from China to Britain arrived in February of last year – (see our news post at that time for more information)

China now plans to create a Polar Silk Road of new Arctic shipping lanes, to extend the Belt and Road initiative created by President Xi Jinping.China is a non Arctic state, but is becoming more active in the polar region, and even became a member of the Arctic Council back in 2013. The council has eight permanent members made up of the five coastal Arctic countries, Norway, Russia, Canada, U.S. and Denmark, and three non coastal members, Finland, Iceland and Sweden.

They have this week published their Arctic Policy Whitepaper.  in which they set out that as a result of global warming, the Arctic shipping routes are likely to become important transport routes for international trade. China respects the legislative, enforcement and adjudicatory powers of the Arctic States in the waters subject to their jurisdiction.

According to the paper China, as a responsible major country, is ready to cooperate with all relevant parties to seize the historic opportunity in the development of the Arctic, to address the challenges brought by the changes in the region, jointly understand, protect, develop and participate in the governance of the Arctic, and advance Arctic-related cooperation under the Belt and Road Initiative, so as to build a community with a shared future for mankind and contribute to peace, stability and sustainable development in the Arctic.

Global warming in recent years has accelerated the melting of ice and snow in the Arctic region. As economic globalisation and regional integration further develops and deepens, the Arctic is gaining global significance for its rising strategic, economic values and those relating to scientific research, environmental protection, sea passages, and natural resources.

With the ice melted, conditions for the development of the Arctic may be gradually changed, offering opportunities for the commercial use of sea routes and development of resources in the region. Commercial activities in the region will have considerable impact on global shipping, international trade and energy supply, bring about major social and economic changes, and exert important influence on the way of work and life of Arctic residents including the indigenous peoples.

Shipping through the Northern Sea Route would shave almost 20 days off the regular time using the traditional route through the Suez Canal, the newspaper reported last month.

In 2017 a Russian tanker made the journey from Norway to South Korea without need of an icebreaker for the first time, because of climate change.

However, there are misgivings from other countries who believe this to be an example of rapid Chinese expansion and a chance to use resources that should be beyond their reach.  China refers to itself in the paper as a ’near-Arctic state’ and as such believes that its close geographical location means that the natural conditions of the Arctic and their changes have a direct impact on China’s climate system and ecological environment, and, in turn, on its economic interests in agriculture, forestry, fishery, marine industry and other sectors. However, oil, gas and mineral resources are also part of the rich range of resources that are present in the Arctic, and China seem keen to capitalise on those. Fishing, scientific research and mining are also possibilities and China requests involvement due to the direct impact that the Arctic has on their climate system, ecological environment and economic interests.

Vice-Foreign Minister Kong Xuanyou said at a briefing “Some people may have misgivings over our participation in the development of the Arctic, worried we may have other intentions, or that we may plunder resources or damage the environment, I believe these kinds of concerns are absolutely unnecessary.”

In the conclusion of the paper, China state that the future of the Arctic concerns the interests of the Arctic States, the wellbeing of non-Arctic States and that of the humanity as a whole. The governance of the Arctic requires the participation and contribution of all stakeholders. On the basis of the principles of “respect, cooperation, win-win result and sustainability”, China, as a responsible major country, is ready to cooperate with all relevant parties to seize the historic opportunity in the development of the Arctic, to address the challenges brought by the changes in the region, jointly understand, protect, develop and participate in the governance of the Arctic, and advance Arctic-related cooperation under the Belt and Road Initiative, so as to build a community with a shared future for mankind and contribute to peace, stability and sustainable development in the Arctic.

China have already proved their expansion plans through their earlier silk road and belt initiatives which although could take up to half a century to complete, ultimately should succeed. Safeguarding the environment of the arctic has to be a priority in a time of global warming, and with China pushing ahead it is down to the other members of the Arctic Council to make sure that they are doing as they say they would and keeping to the premise that the counties can work together to build a better Arctic for many centuries to come.

golden week

ALERT: Golden week and the implications for shippers

As part of celebrations for golden week, also called National Day, a major holiday is coming up in China from Saturday 1st October for a week, officially ending on the 7th but with effects lasting until the 10th.

It has been celebrated in mainland China and Hong Kong since 2000. The holiday was implemented by the Government to encourage domestic tourism and allow families to make long distance trips. This means that businesses come to a standstill.

All businesses will be closed, cargo flights are cancelled and ports operate on basic crews. Shipping quotes will be hard to obtain as nothing moves in or out.  Vessels are usually under capacity at this time so don’t sail.

Our advice is plan ahead! Contact us as soon as possible for rates and availability to secure your shipment in time. Please also be advised that there will be a back log of orders and freight after golden week which will mean that space will be at a premium.  If a shipment is time critical it is important to be organised before next week.

You can submit an enquiry through our website, send us an email or call us on 02380 337778.

We look forward to hearing from you.