Foreign Trade in ZheJiang and Guangdong Province Enters Off-Season As the Container Freight Rate of the European Route Plummets

According to the statistics from Alphaliner Research, in October the decline in China’s container freight rate persisted and aggravated, hitting a new low point in this year. Ministry of Transport, the latest data of the Ministry of Transport show that the in first three quarters the overall China’s foreign trade container transportation maintained a rapid growth, but now it is experiencing a rapid slowdown.

According to the latest trade data released by Hangzhou Customs Office that compared with the September monthly export value in October of Zhejiang Province fell dramatically. Among them, export value amounts to $ 16.69 billion, down by 16.1%, and that of imports, $ 7.31 billion, down by 13.5%.

This is not a phenomenon unique to Zhejiang Province. On the 14th this month, the acting governor of Guangdong Province, Zhu Xiaodan said that at present Guangdong ‘s foreign trade has been demonstrating a significant downward trend. The current global economic downturn exerts a direct impact on the import and export of Guangdong, the country’s largest trading province.

“From January to June the overall situation was good, when the province’s total foreign trade volume grew by 26%. From January to October the total trade volume experienced a drastic slowdown. The exports in October increased by only 7.8% year on year, its double-digit growth rate reduced to a single digital one and compared with the September, monthly export in October dropped by 8.7%. The Challenge facing our export will be as grave as that in2008. “said Zhu Xiaodan.

Influenced by the European debt crisis and other external factors, the two provinces’ foreign trades are subject to heavy losses to varying extends. Xia Hong, the Director General of Foreign Trade Department of the Wenzhou Municipal Bureau of Foreign Trade and Economic Cooperation said that the direct result of the European sovereign debt crisis is that the consumer demand is declining and the dealers purchase inventory will be reduced, which directly impairs the foreign trade in Zhejiang and Guangdong provinces.

At the same time, as the global economy slows and trade demand drops, many international shipping companies have already begun to withdraw its shipping route narrow their business scope, and reduce their transportation capacity.

Container Freight Rate of the European Route Plummets

Customs statistics show that in October exports volume was 157.49 billion U.S. dollars, up by 15.9 %, but last month’s statistics was $ 169.7 billion, down by 7.3 %, which is marked decline.

According to the statistics of Alphaliner Research, a French shipping consultancy, in October the Container Freight Rate continued to decline, hitting a new bottom of the year. In addition to China’s export container routes in Southeast Asia increased slightly, the other routes appear to decline to varying degrees, of which the rote of South Korea and Europe have demonstrated the largest decline.

The minimum price of some shipping line of the European routes has dropped to $ 500 / TEU, a record low since August 2009. Compared with the $ 2,100 during the peak season, it is a steep drop of 76%. It is learned that since the beginning of the year the shipping price between Asia and Northern Europe freight routes has dropped 54% and that between Asia to the U.S. freight lines also decreased by 24%. The slump of the two largest global trade route freights has begun to spread to emerging markets routes.

Chen Yi, a senior shipping expert said that as the traditional off-season is around the corner, the market has experienced a further downward trend and the container shipping freight market had not really hit the bottom.

On October 11th, the PORT OF SHANGHAI released the first three quarters’ Performance Overview, in September Container volume showed a sluggish growth. Compared with the double-digit growth in previous years, the growth container throughput this year demonstrates a steady trend.

According to the statistics from Shanghai International Port?Group?Co.?Ltd, in September this year, the Group completed the container volume of 2.755 million TEUs. The cargo throughput was 40.344 million tons, decreased by 1.8% and increased by 0.03% respectively as compared with those in the August.

Officers from the Port of Shanghai told reporters that this year shipping companies subjected more negative influences than those port enterprises. Some ships getting in and out of the Port of Shanghai were not even fully loaded.

According to Alphaliner Research, a French shipping advisory agency, some shipping companies have started or are planning to withdraw from a number of main Europe and the U.S. routes. From the April and September, 7 routes had been cancelled on the east and west coasts of America. Coupled with 4 routes cancelled before the end of last year, altogether there are 11 lines. This new batch of canceled routes amounts to 6% of the total shipping route of the U.S. east and west coasts.

This will inevitably affect China’s export market , the Ministry of Transport released the latest data , the first three quarters of the country ‘s foreign trade container throughput of the overall transport maintained rapid growth, but growth down significantly.

On October 9th, the Ministry of Transportation announced on the regular conference that in the first quarter this year the freight transport of highways, waterways, and air routes in general maintained a rapid growth. The coal transport from the port is in its full swing even in its off-season. But there have been fluctuations in metal ore transportation. The growth of large foreign trade container transportation dropped significantly, the overall downturn in the shipping market and capacity oversupply are very conspicuous.

In this meeting the Ministry of Transport has declared that it will study and solve the shipping market downturn, the supply of excess capacity and other issues. Ministry of Transport promised that the government would continue to take decisive measures to speed up the capacity restructuring. And the reasonable regulation of the market capacity will help shipping companies to deal with and overcome difficulties.

EU Exports Experience the Sluggish Growth

According to a textile business owner in Zhejiang Shaoxing, after the third quarter, many customers in Europe spontaneously cut orders and delayed delivery time as if they had arranged to do so.

Ge Yibo, the Director of the Hangzhou Customs Statistics Division said that the currently the foreign trade in Zhejiang Province faces many challenges such as a grave global economic slowdown, weak economic recovery in European and other developed economies, , rising raw materials costs, and small and medium private enterprises financing difficulties.

Zhejiang province’s export to Japan, ASEAN, Korea and other neighboring markets maintain a rapid growth in imports and exports, but its export to the U.S. and European markets experience a further slowdown. In the first 10 months this year, Zhejiang Province’s total export and import volume to EU and the U.S. was $ 55.83 billion, a considerable increase over the last year. But the growth rate further slowed down, 1 and 0.8 percentage points lower than the previous 3 quarters respectively.

China’s General Administration of Customs recently announced the trade in September also showed that the year on year growth of China’s exports to the EU has dropped from 22% in August to 9.7% in September.  The European debt crisis has indeed generated a great influence over the Chinese economy.

Zhu Xiaodan, the acting governor of Guangdong Province, said that the EU is one of Guangdong ‘s largest export market . The European debt crisis has a very significant impact on the export of Guangdong Province. From the third quarter of this year, Guangdong ‘s exports to the EU has shown a marked trend. Since 2011, each month all the EU’s export growth is less than or significantly lower than the province’s total exports.

From January to October this year, Guangdong Province’s exports to the EU amount to $ 60.3 billion, an increase of 11.3%, lower than the province’s export growth by 9.2 percentage points. “If the debt crisis continues for some time in Europe, one of our major export markets, then in the foreseeable future, our exports will be facing greater pressure.” said Zhu Xiaodan.

Reports has it that at present the Guangdong provincial government has considered arranging for the deputy governor to go on a tour around major emerging market to expand its share in those countries’ export market and endeavors to build a diversified export structure.

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