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China's export push ahead of US tariffs deepens global shipping woes

10 Jul '24
2 min read
China's export push ahead of US tariffs deepens global shipping woes
Pic: Adobe Stock


  • Container freight rates surged due to Red Sea disruptions and China's export rush before higher US import duties on August 1.
  • Asian exporters, including India, face a severe container shortage.
  • Red Sea disruptions and increased Chinese demand worsened the container crisis.
  • Indian officials addressed the issue, noting shipment delays and financial stress.
Container freight rates sharply increased following disruptions in the Red Sea region a few months ago. Recently, China's rush to export goods before the US imposed higher import duties on August 1 further exacerbated the container shortage and rate hikes. Exporters from Asian countries, including India, are facing an acute container crisis. India reviewed the situation last week.

The United States announced an increase in tariffs on imports of electric vehicles, batteries, computer chips, and medical products from China, effective from August 1. There are indications that Chinese exporters have ramped up the shipment of these products before the hike in import duty in the US.

Industry sources report increased demand for containers at Chinese ports. Typically, ships arrive in China with imports from the US, Europe, and other Western regions, returning with exports from China and other Asian nations. However, disruptions in the Red Sea region due to the Israel-Hamas conflict have forced longer routes through Africa, leading to a shortage of ships and containers. The heightened demand from Chinese exporters has further strained shipping services for South and Far-East Asian countries.

Purusottam Parmanandka, joint managing director of Tiruppur-based yarn trading company Kesharinandan Knit Fabrics Pvt Ltd, told Fibre2Fashion, “Exporters are facing an acute crisis of containers at Indian ports. They are unable to ship their consignments, which causes financial stress. They cannot expect payment for their consignments on time if they get delayed. The entire textile sector is facing this serious problem.”

Last week, Indian Minister of Commerce Piyush Goyal met with exporter organisations and export promotion councils to address the container crisis. Export bodies expressed concerns over potential shipment delays and higher freight charges, which are causing significant challenges for the export community.

The Drewry World Container Index (WCI) increased by another 10 per cent to $5,868 per 40-feet container for the week ending July 4. It was 298 per cent higher than the same week last year.

Exporters anticipate that freight rates will likely stabilise once the rush from Chinese exporters subsides after the deadline.

Fibre2Fashion News Desk (KUL)

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