China Blue News: Ningbo actively responds to the impact of the Middle East situation. Industry reminds to beware of the risk of container shortage in the future

China Blue News Zhejiang Voice reporter Gao Song correspondent Hu Jinqu Yao Jue
　　   
The import and export trade volume of Ningbo to the Middle East region accounts for about one-fifth of the province's total.
Affected by the situation in the Middle East, some foreign trade enterprises in Ningbo have been hindered in shipping, and freight rates have also increased accordingly. Relevant departments are actively taking measures to respond. The industry reminds us to pay special attention to preventing chain reactions such as port shortages in the future.
Ningbo Xinle Electric Appliance Co., Ltd. had 1000 washing machines scheduled to be shipped to the Middle East in early March. However, halfway through the loading process, they had to be pulled back to the warehouse due to a sudden change in shipping schedule. The head of the production department, Zheng Renfan, said that the delivery time is still waiting for customer notification. "There were originally 6 containers sent to Yemen, but after loading 3 containers, we received a message of a change in the delivery information, so we ultimately unloaded all of these containers back into the warehouse. 95% of our company's products are exported, with 30% going to the Middle East. In recent days, most Middle Eastern customers have shown a wait-and-see attitude
At almost the same time, Ningbo Xiaohe Supply Chain Management Co., Ltd., which acted as an agent for exporting nearly 500 cars to the Middle East, was forced to be stranded on a cargo ship due to reasons such as the closure of the Strait of Hormuz. Some of the ships that have passed through the Strait of Hormuz can unload, but they cannot return. For those ships that have not yet passed through the Strait of Hormuz, they are preparing to anchor nearby or unload at nearby ports. There is currently no particularly mature solution for this. The Middle East market is a global automobile trading market, and because we focus on the Middle East, 90% of our business has been suspended
According to relevant personnel from the Ningbo Municipal Bureau of Commerce, more than 30 companies in Ningbo originally planned to attend the Middle East Clothing Exhibition in the United Arab Emirates in May, but their travel arrangements have now been postponed.
According to customs data, Ningbo's import and export volume to the Middle East region exceeded 120 billion yuan last year, accounting for 20.7% of the province's total. The exported goods mainly include mechanical and electrical products, electric manned vehicles, clothing, high-tech products, etc. The continuous escalation of the situation in the Middle East has brought uncertainty to the shipment and production of some local foreign trade enterprises. At present, shipping companies such as Hapag Lloyd and Dafei have suspended bookings in the Middle East region, and some operating shipping companies have begun to impose war risk surcharges. Xu Qi, the Middle East route manager of Ningbo Port Southeast Logistics Group Co., Ltd., said, "The most obvious ones are the Middle East and Red Sea routes, with small container (increase) around $2000 and high container (increase) around $3000. Secondly, the Indian route, as well as the European and American routes, will also be affected by some of the 'butterfly effect'
Faced with the unknown prospects of the Middle East, many Ningbo enterprises are actively responding.
A batch of Cixi small household appliances worth nearly $120000 from Ningbo Jiawei International Logistics Co., Ltd. has been stranded in Abbas Port, Iran. After emergency negotiations, overseas customers, domestic factories, and freight forwarding companies have shared the additional shipping costs and plan to transfer this batch of goods to other ports.
Zheng Renfan, the head of the production department of Xinle Company, stated that they will optimize their own production lines and adjust their inventory structure to cope with potential risks such as delivery difficulties, customer loss, inability to fulfill orders, and even forced cancellation in the future. He said, "In the future, we will actively follow up, communicate with customers in a timely manner, evaluate their performance ability, optimize production arrangements, reserve sufficient warehouse space, cope with possible turnover difficulties, and ensure the orderly operation of the company
Zhong Zhechao, founder and CEO of One Shipping, believes that given the current severe situation, it may be better to take a break for goods shipped to the Middle East, especially along the Persian Gulf coast, in the next one or two weeks. He said, "Suspending Middle Eastern goods in the short term is a wise move. For those already in transit, priority should be given to returning, changing ports, or transshipment. As for global freight rates, the impact of the closure of the Strait of Hormuz is about to have a domino effect
The industry points out that starting from the end of 2023, the Red Sea route will be blocked, and a large number of China Europe shipping routes will have to detour around the Cape of Good Hope. Now, due to the impact of the war, the resumption of navigation in the Red Sea has once again been hindered. Maersk and other major global shipping companies have cancelled their plans to return to the Red Sea route, which means that many goods exported to Europe will continue to detour around the Cape of Good Hope. According to the analysis of Ningbo Shipping Exchange, the traditional peak season for shipping in the third quarter of this year may make it difficult for China to fully restore normal routes to Europe. The world's largest shipping company, Mediterranean Shipping, has announced that the freight rates for European routes will be raised again in late March.
Analyst Wu Xintong from Ningbo Shipping Exchange reminds that if the Strait of Hormuz and the Red Sea waterway are restricted for a long time, containers that should have returned from the Persian Gulf area will not be able to flow back in time, leading to chain reactions such as container shortages. She said, "Although we are currently in a low season, the return of empty containers will not have a significant impact. However, if this time period is extended to a point where it may conflict with our shipping peak season, it will have a significant impact on the overall capacity and empty containers, which is something we need to be vigilant and pay attention to now
At present, relevant departments in Ningbo are investigating the specific demands of enterprises affected by the Middle East situation. Ge Linan, Director of the Foreign Trade Management Department of Ningbo Municipal Bureau of Commerce, stated that they will guide enterprises to closely monitor global shipping trends, avoid high-risk route areas, strengthen risk prevention in contracts signed with Middle Eastern customers, and safeguard their legitimate rights and interests.
Ge Linan said, "Give full play to the overall coordination role of the High Quality Development Command of Foreign Trade and Economic Cooperation in our city, and identify problems in personnel travel, order fulfillment, trade risk response and prevention, insurance claims, and other aspects. At the same time, coordinate with our transportation, foreign affairs, finance and other departments to form a working force to resolve enterprise problems and ensure the stable operation of foreign trade enterprises