Asia-US container freight rates triple a year ago Disruption of transport truck operation such as road control and inspection requests Morgan Stanley and others downgrade growth forecasts for this year in China [Beijing = E-Daily Correspondent Shin Jeong-eun] Concerns about supply chain disruption are growing in China, the factory of the world due to the spread of Corona 19. As each city went into shutdown, factories were shut down and logistics and transportation were disrupted. The red light also lit up on Chinas economic growth target of 5.5%. Foxconn Headquarters in New Taipei City, Taiwan (Photo=AFP) In some ports in China, container freight rates have already begun to rise due to longer waiting times for ships. According to the New York Times on the 16th, the cost of shipping a container from Asia to the west coast of the United States on the 11th was $16,353 (about 20.23 million won), up 1% from a week ago. Freightos, a freight reservation platform, said the cost of container shipping on the route has nearly tripled from a year ago. 12 times higher than two years ago. China has been operating with its ports closed to prevent delays in shipments since last summer, after experiencing a logistical disruption due to COVID-19 and power shortages. It was designed so that the employees could live and work in the port. In June of last year, in Yantian Port, Shenzhen City, Guangdong Province, a major export port, the waiting period for ships at the International Container Terminal increased from 0.5 days to 16 days on average as authorities strengthened quarantine due to the spread of Corona 19. But the problem is that it is not easy for the cargo to get to the port. Departures of ships at the port are said to be delayed by at least 12 hours due to truck traffic restrictions. Julie Gerdeman, president of supply chain analytics firm Everstream Analytics, said the wait time could increase to two weeks soon. Cities near Shanghai are closing highway exits or requiring drivers to test negative for COVID-19 nucleic acid (PCR). As a result, the lines for trucks carrying key parts in factories are getting longer, causing disruptions in logistics. Not only Shanghai, but also Guangdong and Jilin provinces, where the spread of COVID-19 is severe, started to be managed in a controlled way. Shenzhen and Shanghai all have ports. Production of companies located here is also being disrupted. Foxconn, a supplier of Apples parts, temporarily halted operations at its Shenzhen plant and sent the amount to another plant. Taicang Port near Shanghai, China. (Photo = Correspondent Shin Jeong-eun) In Changchun, Jilin Province, the center of Chinas automobile industry, the operation of five automobile factories including Toyota Motor Company has been completely suspended. If the COVID-19 situation in China continues, the impact on the economy is expected to increase. The Chinese government has pledged to achieve a GDP growth rate of around 5.5% this year. However, the market consensus is only 5.2%. The Chinese economy is in an unstable situation due to the re-spread of Corona 19, the prolonged crisis in Ukraine, and the stagnation of the Chinese real estate market. “Over the past week, the coronavirus situation in China has deteriorated at an alarming rate, and the Chinese economy could take a serious hit again,” said Lu Ting, chief China economist at Nomura. Nomura projected Chinas economic growth this year at 4.3%. U.S. investment bank Morgan Stanley lowered its economic growth forecast for the first quarter of this year from 0.6% to 0% on the 14th (local time), saying that the Chinese government is prioritizing the fight against COVID-19 over the economy. Morgan Stanley also lowered its annual economic growth forecast for China this year from 5.3% to 5.1%.
