Tariff window period in the U.S. shipping: customers stockpiling, businessmen “burst orders”

“125% down to 10%, 24% rate suspended for 90 days”, May 14, China and the United States mutually adjusted tariffs officially implemented, the narrowing of the figures is undoubtedly a warm current of foreign trade.

“The 90-day window period will be treasured by U.S. importers and Chinese exporters.” One Shipping founder and CEO Zhong Zhechao has long felt the warming of the pace of freight transportation: the backlog of orders and inventory to be quickly arranged for shipment, and U.S. buyers will also accelerate the order, replenish and increase the amount of inventory to deal with the uncertainty of the tariff buffer period after the start of the school year or the holiday season in the second half of the year to get ready.

The other side of the ocean to stock up, China's foreign trade enterprises also accelerate the resumption of exports to the United States shipments. The relevant person in charge of a down products company told the Beijing News shell financial reporter, is still communicating with U.S. customers, is expected to resume production in the near future. This company and the largest U.S. customers have been working together for 20 years, before the impact of the U.S. tariff increase, the company's exports to the U.S. almost stagnant.

The rush to ship the backlog of orders and prepare the second half of the inventory in advance of the two needs, is driving a sharp rise in demand for shipping, a number of shipping companies have been quickly raised freight rates. “The cabins before mid-June have been booked out, especially Shenzhen e-commerce exports more commodities, including furniture, intelligent manufacturing products and so on.”

90-day window, U.S. customers stock up “rush”

“During this period of time, my mood is like riding a roller coaster, and now I have not slowed down.” Guangzhou, a clothing company related to the person in charge of shell financial reporter confessed. This company is engaged in the clothing export business, of which, the U.S. market accounts for up to 60% or so. Today, has restarted the export business to the United States, “are still the original American customers, they need our goods.”

More than a month, the U.S. and China tariffs to ease. 14 May onwards, the U.S. and China mutually adjusted tariffs formally implemented, significantly reducing the level of bilateral tariffs, the U.S. canceled a total of 91% of the imposed tariffs, the Chinese side correspondingly canceled 91% of the counter tariffs; U.S. suspension of the implementation of the 24% of “reciprocal tariffs”, the Chinese side also correspondingly suspended the implementation of the 24% counter-tariffs. 24% countermeasure tariffs.

Shell financial reporter learned that a number of foreign trade enterprises have resumed the export of goods to the United States, and some enterprises are negotiating with U.S. customers.

In the domestic lighting industry head enterprise work of the old foreign trade people Liang Yu (a pseudonym) to shell financial reporter said: “China and the United States talks result is indeed exceeded expectations, at present, the company has temporarily resumed exports to the United States goods shipment, but also very concerned about the specific situation after the 90-day window period.”

The United States imposed tariffs several adjustments, Zhong Zhechao's mood also followed the ups and downs. since mid to late April, the impact of high tariffs orders almost stopped, after a month of time, the United States warehouse shelves are empty, retailers will certainly increase the import of Chinese goods.

In fact, U.S. customers have been hoarding goods “run”. Yiwu manufacturers as well as U.S. customers want to ship as soon as possible to receive goods, making the transportation container “a cabinet hard to find. This makes Yiwu merchants Nie Ziqin quite helpless, “who now first get the container who will have shipping priority. Many customers are looking around for relations, and even some people specifically called to urge not to sell the goods to others, and so they find the container on the first notice.”A container may rise to $6,000 next month; siphoned capacity is returning

The 90 days of the 24% tax rate suspension has become a valuable window.

Shenzhen crowdsourcing logistics technology limited company Gan Jianjun told shell financial reporter, the market changes quickly, May 12, China and the United States issued a joint statement of the Geneva economic and trade talks, the day of the booking increased significantly, customers have to rush to get the inventory shipped out in a timely manner.

“It takes 20-30 days for goods to be shipped from China to the U.S. In fact, the window period for foreign trade enterprises is only more than two months.” Gan Jianjun said that the second half of the year is the peak season for sales in the United States, especially in November and December, Christmas, Thanksgiving before the big promotion, these two months of sales basically accounted for 40% -60% of annual sales.

Gan Jianjun also has a schedule in mind, the remaining time is obviously tight. “U.S. buyers have to rush to confirm orders with Chinese factories in May in order to catch up with the peak season, because the whole process of factory production, logistics inventory, etc., down, it will take 5 or 6 months.”

On the one hand, the backlog of orders and inventory since early April needs to be quickly arranged for shipment, on the other hand, the U.S. buyers to speed up the speed of orders, make up and increase the amount of inventory, so that the demand for U.S. export capacity has increased significantly.

Shell financial reporter interviewed that in the early period due to the U.S. tariffs low cargo volume, part of the route canceled or transferred to South America, Europe and other regions, and now accelerate the return of capacity to the U.S. routes. A number of shipping companies have also less than 24 hours after the tariff reduction has begun to significantly increase the freight rate, a 40-foot container up to 2,000 U.S. dollars.

“Freight rates have risen sharply, which reflects the industry has predicted that China-US trade is about to rebound quickly.” Zhong Zhechao said.

Shell financial reporter interview learned that recently, each shipping company has issued a price increase notice, China and the United States route is expected to rise every half a month round. before May 15, the United States West route each 40-foot high container 2000 U.S. dollars, the United States East route each 40-foot high container 3000 U.S. dollars. after May 15, the major carriers of each high container comprehensive rate increase surcharge up to 600-700 U.S. dollars. After June 1, the U.S. West route tariffs are expected to rise to 6,000 U.S. dollars per high container.

The price increase stems from the short-term imbalance between supply and demand of capacity. in May, a large number of shipping companies to withdraw or stop sailing China-US routes, some shipping companies withdrew almost 40% of the capacity, and now the capacity to transfer back, it may take two or three weeks.

Gan Jianjun's company for the customer booking, before mid-June cabin has been booked, especially in Shenzhen, more e-commerce export commodities, including furniture, intelligent manufacturing products and so on.

In addition, some freight forwarders also encountered the shipping company temporary contract. For example, before and the shipping company signed a contract of 1,000 large cabinets, May 13, the shipping company directly to the contract volume cut in half, which also predicts that the market freight will continue to go up.

Nonetheless, freight rates may not be so firm in the long run. On the one hand, the shipping companies are trying to find ways to restore capacity, on the other hand, the U.S. state of high interest rates, high inflation, big retailers tend to pay back the loan first, the remaining ordering funds are not much. At the same time, the tariffs are transmitted to the U.S. terminal price increases, which may lead to a decline in the number of short-term sales.

“We are also continuing to wait and see, hoping to help customers ship their goods to the U.S. early with lower costs and more space.” Gan said.

Data from the General Administration of Customs show that in the first four months, the United States is China's third largest trading partner, and the total value of trade between China and the United States was 1.44 trillion yuan, a decline of 2.1%, of which exports to the United States declined by 1.5%, and imports from the United States declined by 3.7%.

The global trade friction brought about by the United States will still bring great uncertainty to China's export enterprises, market diversification, customer diversification has become the focus of the current development of foreign trade enterprises.

In the tariff “storm” more than a month, the United States customers accounted for a larger amount of goods down products company, expanding the Central America and Australia's new customers, Guangzhou, the clothing company also expanded the European customers.

According to Zhong Zhechao's observation, some export enterprises have sprouted market diversification plans in 2018, and over the past few years, many export enterprises have gradually laid out their supply chains and overseas production resources in Southeast Asia, South America, Eastern Europe and other places. In addition, to cope with global uncertainty, enterprises have begun to pay attention to domestic market demand while exploring emerging markets. It is foreseeable that this development mode of both internal and external cultivation and diversified expansion will become the key support for export enterprises to continue to move forward steadily in the fierce market competition in the future.