Christmas goods suppliers in Yiwu, Zhejiang province, experienced a shipping season earlier than usual in recent months, as overseas clients requested orders to arrive sooner than in the past, due to inventory and logistics chain risks.
Yiwu is the world’s largest distribution center for Christmas products like tree decor, Yuletide clothing, festive lights and packaging, with two-thirds of the world’s goods in this category coming from the county-level city.
Although August was typically the busiest month for selling Christmas products to global markets in past years, many popular products have already been sold out, said Su Xueqin, a Christmas goods supplier at Yiwu International Trade Market.
“Pushed by costly ocean shipping container prices and fear of a disrupted supply chain caused by the COVID-19 pandemic, many overseas clients started to place their orders as early as February and March. Therefore, the peak purchasing season for Christmas goods has come to an end ahead of schedule compared with earlier years,” Su said.
Apart from Yiwu, major export ports handling Christmas supplies such as Ningbo-Zhoushan Port, Zhejiang province, also saw an export peak period for Christmas supplies since May this year, said Meng Yuefeng, an official at Cixi Customs, a branch of Ningbo Customs.
While shortages of stevedores, terminal congestion and suspension of voyages continue to occur in many overseas markets, turnover efficiency of ships has dropped, and the balance between supply and demand has been seriously disturbed, Meng said.
He Jun, head of Yiwu Luochen Crafts Trading Co Ltd, said the company’s orders rose 50 percent from a year earlier; yet, it is fairly difficult for the products－a large amount of which are Santa Claus figures and dolls－to be delivered right away.
To avoid congestion, some Christmas decorations have embarked on their journey to overseas markets much earlier than before, he said.
However, the tense situation has not been alleviated and the shortage of shipping capacity is still increasing. Christmas products are time-sensitive. Therefore, foreign customers and domestic exporters have made early preparations, booking orders and shipping them in advance.
The majority of cargo owners and goods producers have formulated production and transportation plans in advance, and then lock the shipping box space a month or even earlier, said Chen Yang, general manager of Ningbo Kimwo International Logistics Co Ltd.
“In addition to racing against time, they also have to race against freight rates,” Chen said. “The impact of the pandemic has caused ocean freight to continue to rise as the shipping price for a forty-foot equivalent container box exceeded $20,000 on shipping routes between China and eastern ports of the United States in August, soaring 500 percent year-on-year.”
However, there is a time difference between order times and delivery times of Christmas products. If the cost increases, it will cause financial losses to foreign trade companies and customers. At present, the increase in shipping prices has exceeded the budgets of some buyers, and many Christmas products with low value and limited profits are facing the risk of being canceled.
For example, a customer originally ordered a container box with a product value of about 310,000 yuan ($47,864). During production, ocean freight rates rose to $15,000, already accounting for one-third of the value of the goods. The client, therefore, may consider canceling the deal, Chen said.
Pressured by high costs, foreign trade companies have to rely on innovation to produce items with more digital functions and added value, as well as develop personalized Christmas products for targeted consumer groups in various countries.
New and innovative items such as Christmas fireplaces with 3D flame imaging and disguised projection technology and music players in the shape of Santa Claus have become popular choices for overseas markets this year, according to information provided by Cixi Customs.
Such upgraded Christmas products also boosted the company’s overall sales. Hu Yujun, deputy general manager at Ningbo Gengxin Appliance Industry Co Ltd, a fireplace manufacturer, said the company has seen a countertrend in its export volume. Compared with traditional fireplaces, the price of upgraded fireplaces has increased by more than 50 percent this year.
On the basis of ensuring the indoor heating function of the product, the ornamental and decorative effects of the product are more prominent. The company’s exports soared by about 25 percent year-on-year in the first seven months.
From the perspective of Ningbo-Zhoushan Port’s export volume, high-value-added Christmas products and their derivatives were one of the major export categories in July and August. While the export volume of these products is increasing, the proportion of high-end Christmas goods is also growing, according to Ningbo Customs.
Despite the uncertainties that have put pressure on China’s exports, the country’s foreign trade maintained an upward momentum in the first seven months, while the country’s foreign trade expanded by 24.5 percent year-on-year to 21.34 trillion yuan, according to the General Administration of Customs.
However, the uncertainties and risks in the global supply chain amid the COVID-19 pandemic were also highlighted.
“Instead of sea transportation, some Christmas goods bound for Europe can be exported via land-based transportation,” said Qiu Xuemei, sales manager of Dongyang Weijiule Crafts Co Ltd in Jinhua, Zhejiang province. “But freight rates for the China-Europe freight train service are likely to double in September.”
Driven by surging demand from European and Central Asian markets, Hangzhou Customs reported that Zhejiang province has seen strong import growth via the freight train service linking Europe in the first seven months.
In the January-July period, the China-Europe freight train service connecting Jinhua in Zhejiang with cities in Central Asia and Europe handled 26.71 billion yuan worth of goods, up 130.7 percent year-on-year.
The reality of tight capacity and high freight rates is a global issue. The Ministry of Commerce, in conjunction with the Ministry of Transport and other government branches, has actively taken measures to increase container supply, boost shipping capacity and strengthen international cooperation, said the Ministry of Commerce spokesman Gao Feng.
“We will further study targeted measures to stabilize foreign trade and smooth international logistics, enrich cooperation with various trading partners and work together to cope with challenges,” Gao said.
Even though the new rounds of COVID-19 outbreaks have brought uncertainty to the world’s economic recovery, Tu Xinquan, a professor of international trade at the University of International Business and Economics in Beijing, said China’s role in maintaining the stability of global industrial and supply chains is irreplaceable.
The risks and challenges currently facing China’s foreign trade generally come from outside. It is forcing foreign trade companies to accelerate transformation and upgrading, seize the opportunity of the global industrial chain and supply chain reconstruction, and grasp the development trend of new business in foreign trade, Tu said.
Moreover, in Southeast Asia, one of the world’s major manufacturing bases, countries such as Indonesia, Thailand, Vietnam and Malaysia have been affected by the pandemic. Lockdown measures in some countries have also led to increasing port congestion and disrupted their export activities, he said.
China’s exports are supported by increasing global demand in high-tech sectors, such as information technology, high-end equipment and new energy, said Liang Ming, director of the Institute of International Trade affiliated with the Chinese Academy of International Trade and Economic Cooperation.
He said production resumption in other countries will drive up demand for higher value-added goods where China has comparative advantages, such as intermediate products.