China Shipping Companies Suffer Losses – Take Advantage and Save

China Shipping Companies (local inland logistic companies as well as ocean carriers) are all suffering losses so far in 2011 due to overcapacity and high fuel prices.

Factors contributing to this loss include:

• TOO MANY NEW VESSELS THIS YEAR DEPLOYED
• OIL Over $100 a Barrel
• A VERY Soft Economy Worldwide
• China Suffering from Inflation
• Cost of Skilled Labor has Increased
• The Ever Strengthening YUAN Against the Weaker Dollar
• Importers are Sourcing in India, Malaysia, Vietnam and Other S.E. Asian Countries

About 30% of China’s coastal shipping companies and 40% of the country’s inland shipping firms are SIMPLY NOT MAKING MONEY THIS YEAR LIKE THEY DID LAST YEAR.

China’s cargo handling capacity from major ports is up over 14% from last year, with over 2 billion tons of tonnage.

(Photo from indiatimes)

If you are an importer reading this, now is the time to do some renegotiating with your supplier for better pricing.

Also contact your logistics provider for better freight costs, because it is back to your “buyers market”. Makes up for last year…maybe.

However, I know what you are thinking…you can’t replace that China quality in other countries. Well ask yourself, can’t you?  Others are. Even if you can’t, you can create enough pressure to force your current suppliers to come down on pricing or possibly find ways to lower their cost by sourcing in less expensive regions in Central China.

I also hear you saying….this would take years because of the lack of skilled labor in these regions. Again, really? Others are sourcing there now, why not you? The Chinese Central Government is pushing hard to get you “Mr. Foreign Investor” to source in several of these regions, Chengdu, Wuhan, Chongqing, etc., with all types of incentives.  It’s high time for some schmoozing with these officials to get the job done. Start practicing your karaoke singing, fake Whisky drinking, and Jenga skills.

If you want to learn some good phrases to throw out,
come to our site for Devin’s 7’s Tips on Doing Business in Asia

One thing to consider is the ever increasing problems of the Yangtze river drying up. There is a serious drought along several ports of this river, which originates from the melting Himalayas. (Al Gore was actually right about something)

But the prolonged dry spell this year in Northern and Eastern China has brought record low water levels. In Wuhan, the average during a dry season is 13 feet, now it is at 9.4 feet.

Although there is a lot of dredging going on all up and down the river, the fact is, container transporting from inland China is not only going to experience long delays, but higher costs. So with that variable in pricing costs in Central China thrown in, it just may not scale for an importer to start sourcing there.  So if not S.E. Asia, there is always Detroit…maybe you can get cheaper labor there?