Business Partner : GM Metal Packaging

Freight Rates from China

Freight hit a record low in October 2015, with 20ft container rates from USD175 and 40ft HQ at USD275 for the sea freight from China to a UK port. The UK internal freight to central UK from any major port is substancially more than the sea freight rates from China to the UK.
The rates in October were not sustainable and if this rate had continued for another 2-3 months it would have jeopardised some of the smaller shipping lines going out of business.
The interesting issue now is that a lot of super vessels Triple E class holding 18,000 TEU (20ft container spaces) were ordered in the peak freight boom of 2009-2010, these new vessels will be coming on stream in 2015-2017 and with the present price level it will be very difficult to cover the cost of these vessels.
No container ship wants to leave port empty so this leaves a lot of shipping lines in a quandary.
We have seen a down turn in China exports with the government trying to halt the decline by revaluing the RMB (China Currency) against the Dollar this coupled with super vessels coming on stream, it is going to be an interesting time over the next 2-3 years for the shipping lines. If I had shares I would be selling them.

CHINA WAGES 2018

The China wage review takes place each year after Chinese New Year.
This wage review then takes affect from the 1st of May therefore giving companies time to prepare paperwork and implement the increase. Chinese wages are controlled regionally so can vary throughout China.
These increases have had a major effect on manufacturing as many businesses have had to relocate further into China where the increases are perhaps less. This can result in longer port transit times and therefore increase the overall prices to the customer.

2017 saw a lower wage increase than previous years however even small increases put pressure on business.
2018 the increase is small, but with the RMB and USD we are seeing significant increase in cost