Made In China
Remember when the Suez Canal got blocked and global trade took a major hit? billions of dollars lost in the process. Well, this time another major logistical hurdle is present, but it’s not just a ship getting stuck in a canal, it involves an entire country. It’s well known that China is one of the largest exporters in the world, after all, almost any product you pick up is likely to say “Made in China” on it. In fact, according to the United Nations Statistics Division China accounts for around 28 percent of global manufacturing output. That places China over 10 percentage points ahead of the United States, which used to have the world’s largest manufacturing sector until China overtook it in 2010. Earlier this year we saw the Chinese city of Guangdong experience a logistical supply issue when a sudden increase in COVID-19 infections forced authorities to shut down districts and businesses. The shutdowns are creating massive shipment delays in key Chinese ports and driving up already-high shipping rates.
Just this one city represented nearly a quarter of all Chinese exports. Today, cities and companies all around China are experiencing issues with shipping, and this time, it’s financial.
Usually, Chinese businesses held an advantage over other countries due to their access to cheap manufacturing. Nowadays, it appears this very advantage is becoming a disadvantage as the pandemic and trade tensions have disrupted international supply channels. This has meant many goods are unable to be shipped out of the country and that the cost of shipping containers has risen. In fact, the cost of shipping containers has climbed five-fold from around $3,000 to as much as $15,000 each. What do you think about the shipping issue? And will the price ever come down?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.