Chinese exporters are feeling the pinch of rising shipping costs due to the Red Sea terrorist attacks by Yemen's Iranian-backed Houthis, with Premier Li Qiang even vaguely mentioning the crisis in a speech at the World Economic Forum (WEF). is. .
In his remarks to the WEF last week, Li emphasized the need to keep global supply chains “stable and smooth” and there are currently no major problems facing supply chains. virtual shutdown At its peak, almost 13% of the world's shipping volume was transported through the Red Sea and Suez Canal shipping routes.
Sunday Reuters Quote Chinese exporters said the Red Sea blockade had increased costs and lengthened transit times, “wiping out already thin profits,” as auto exporter Han Changming said.
“Some companies, such as U.S.-based BDI Furniture, have said they are relying more on factories in countries such as Turkey and Vietnam to reduce the impact of the disruption, and China amid geopolitical tensions. “This has spurred recent moves by Western countries to reduce their dependence on the United States,'' Reuters noted.
Houthis on Friday promised But the pledge means little to a huge export market that cannot fully rely on Chinese-flagged vessels to transport cargo.
China may have underestimated how dependent its export market would be on the Red Sea route, which provides fast and cheap service between Asia and Europe. With costs rising three to four times and shipping times taking weeks as nervous companies have to divert ships around the Cape of Good Hope, Western buyers are turning to alternative suppliers.
Some analysts believe that even if the Houthis stopped attacking cargo ships tomorrow, the changes in supply chains would be permanent. Because Western companies are already looking for alternatives to China, and after the Houthi crisis, they will never be satisfied with securing vital supply lines. Once again at the mercy of Iran and its proxies.
Some Chinese exporters are reportedly so nervous about the restructuring of global shipping that they are already planning to lay off employees due to permanently lost business. It is being On the other side of the Suez Canal, small and medium-sized enterprises whose business model is low-cost, “just-in-time” transport are struggling to make ends meet.
Marco Castelli, founder of a company called IC Trade that exports Chinese machinery parts to European buyers, told Reuters that his company would only raise prices slightly and deal with some backorders to help survive the Red Sea crisis. He said that the general concept is wrong. On both sides of the Red Sea supply chain, exporters and importers have built companies with razor-thin profit margins based on cheap and fast transport, without which they cannot survive.
Castelli noted that Chinese factories are typically not paid until a Western buyer receives the shipment, “so if they're late, they can't pay their suppliers or workers.” did.
of South China Morning Post (SCMP) pointed outside Lunar New Year, which usually falls on Monday, puts enormous stress on supply lines, with nowhere near enough rail and air transport capacity to make up for the 30 percent drop in cargo passing through the Red Sea. China is urging Western importers to consider its rail lines as an alternative, but in addition to being slow and expensive, these lines run close to areas of conflict in Russia and Ukraine. The risk is high because there are
of wall street journal (WSJ) Said The transport disruption is starting to cause “ripples throughout the supply chain in Europe and the United States,” including increased costs for shipping companies that do not transit the Red Sea. Consumers at the end of the supply chain have so far been largely shielded from rising costs, but that is likely to change if the disruption continues beyond the Lunar New Year holiday season.
China's state-owned Global Timeson the other hand, claimed The impact of the Red Sea crisis is already “diminishing” as demand falls and further price increases are contained.
The relief will likely only be temporary. Global Times The next surge in transport demand is scheduled for March, making the concession. Shipping analysts said if the Houthis continue to disrupt shipping beyond March, freight increases are likely to become entrenched and consumers will begin to feel the pinch.
