Topic: Manufacturing orders to China down 40% in unrelenting demand collapse (Read 519 times)

Here the question arises - do modern manufacturers know how to make durable things (products)? And another question - are modern people ready to consume such products?

I will give you an example. English handmade leather shoes can be worn for life (changing soles periodically). However, will you wear such shoes or would you prefer to buy sneakers?

At one time, I found that the less durable Puma summer sneakers, the more comfortable they are. I then started buying four pairs of these comfortable sneakers during the discount season. They were 50% off. I wore each pair of sneakers for no more than 3 months, and when the mesh was torn on them, I threw them away.

Now Puma has closed all its stores in Russia.

Perhaps soon in Russia they will begin to mass-produce very durable felt boots, but this will not make me very happy.

I am not sure yet better the petro-dollar will find an end in the short or mid term, because there are still oil producing countries which are willing to accept American fiat in exchange of their natural resources.

-snip-

This is the only thing that has left for US and it is called Petrodollar. The funny thing is that all oil producing countries are slowly dumping US dollar too! The latest is Russia that started when sanctioned and now anyone in Europe that buys anything from Russia is paying in Ruble. Even the US colony called Saudi Arabia is slowly dumping USD, the recent Chinese visit there started a wave of political pressure from US to dissuade them from dumping it (we have to wait and see how successful that can be though). Are we going to say hello to Petroyuan? lol

---

With China securing more cheap oil and resuming their economy/production, next year would be very interesting regarding the global energy prices and the industries in the West that don't have access to said cheap oil anymore.

It would also be important oil producing countries to continue to accept American currency for their energy, for obvious reasons.

Many will come to this. wasteful, unbridled consumption, and uneconomical use will become a thing of the past for many. People will learn to save, use what they have more efficiently, and not waste money on buying unnecessary or non-critical goods. This is fine. But this will also lead to a decrease in the turnover of economies like China, when a huge number of "disposable" things are produced. People will give preference to slightly more expensive but better and more reliable things.

I have to say its also a bit of a problem about peoples purchasing power as well. I worked in a company that ordered some stuff from China, and it was like every 2-3 months as well so its not like a small amount, we are talking about nothing major like billions, but like 1.5 million dollars worth every 75 days.

That company now stopped ordering from there because they are not making any profit, so they are just reusing the items after clearing it very carefully, and that is looking like an easy solution most, but this is a towel that they distribute to hotels, when you learn that, it becomes clear why its a big deal, if you are the only one who used that towel that's an elite hotel, if they just wash it and give it back to you, that's not so elite.

USA should stop being the money printer of the world to begin with. They keep printing money and then buy something with it from other nations and then they print more when they have none left and we act as if that's okay.

I am sorry but USD doesn't really have the value it used to have, we put value into it, normally I would prefer to go towards Euro a long time ago, even if that doesn't look as strong right now, it has a clearer future right now and looks to be backed by people with actual economic goal, not people who just do whatever they want and show you a guy afterwards to make you accept. China is doing worse because they dependent on others money, that is the main issue.

Though to my eye, even if their real debt turns out to be 400% higher than reported (let's be pessimist), they're still end up with total debt well below GDP (which is how I see sustainable debt management).

The US is about to break even (and the minute they stop their wars they're back deep in the red, which is why they won't), while almost the entire EU members already have debt multiple times their GDP.

USA should stop being the money printer of the world to begin with. They keep printing money and then buy something with it from other nations and then they print more when they have none left and we act as if that's okay.

I am sorry but USD doesn't really have the value it used to have, we put value into it, normally I would prefer to go towards Euro a long time ago, even if that doesn't look as strong right now, it has a clearer future right now and looks to be backed by people with actual economic goal, not people who just do whatever they want and show you a guy afterwards to make you accept. China is doing worse because they dependent on others money, that is the main issue.

Might also remember while hard cash is needed, China is also sitting on a huge and growing pile of foreign reserves (1/3 of the world's foreign reserves, which it of course needs to continue sitting on in the short term to continue their export policy).

I wouldn't say it's critical. They may be forced to finally show their hand and that would actually be a bone-cruncher on the rest of the world.

Tech not in the east? Not sure that's going to be the truth for much longer, if at all now. Japan, SK, Spore, even China itself, at least on a more distributed level.

Reserves that start to look thinner and tinier when it comes to the amount of debt both the central and regional governments are piling up, just the other day they did another trick to refinance expiring bonds and not count it up
https://www.globaltimes.cn/page/202212/1281553.shtml

Might also remember while hard cash is needed, China is also sitting on a huge and growing pile of foreign reserves (1/3 of the world's foreign reserves, which it of course needs to continue sitting on in the short term to continue their export policy).

The planet's resources are limited.  If each of the countries begins to independently produce microchips, this will result in a slowdown in scientific and technological progress throughout the world.

Yes, Europe will achieve success in microelectronics, but the initial products are likely to be of poorer quality than under the conditions of the global division of labor.  

And who would not say anything about the huge economy of China - it is DEPENDENT on the West. It depends on how much the West will buy (paying with hard currency, which is critically needed by China). And the Chinese economy is dependent - TECHNOLOGICALLY. And technology is the west, not the east ....

US is trying t decrease its dependance on chinese exportions and they seem to be doing this gradually. The division in the world is getting deeper and in a decade or two we will be even more segregated than now, between occident and orient. Each side of the world trading among themselves, while attempting to overcome the opposite side on economical and military aspects.

Personally, I see the increase of imports from Europe good news if they can supply the occident with goods superior in quality than the chinese ones, which are well known for being cheap, but with low durability and high fragility.

There are so many factors involved that's it's impossible to pin the reason on any single thing. We've had Covid which was a devastating shock to global supply chains, after which China has been stuck in a limbo with their zero Covid strategy causing huge disruption due to random lockdowns for the last three years. Shipping costs have also soared in that time, a container price went from something like $8k to $24k at one point. Oil prices have also been erratic which filtered out into the wider economy and pushed up the price of everything. Food as well, thanks to Putin's war in Ukraine - two countries who are massive food producers are now engaged in battle for no reason at all.

But, but, bro, they have Russia!
Don't you hear it? China is planning to replace its $500 billion (US) and €223 billion (EU) with Russia, lol, with Russia!!!!! And all this, while somehow Russia's plan is to replace all Eu imports with local manufacturing, so, this plan seems to have some kind of flaw but I can't really pinpoint it!
Seems like that famous new world word order is going to be a short-lived dream in some madman's mind.
Again, delicious!!!

......

I always warned the ones thinking that the EU and US economies even having a hiccup will send the ones depending on them into a coma, but no, this will be a boost for emerging markets, no way, COVID seems to not have been an economic lesson to the ones that saw thousands of jobs being destroyed in countries not really affected by the pandemic but by no interest in purchase from importers elsewhere.

According to this, the united states has seen a decline of imports arriving on the west coast from china. Accompanied by a simultaneous boost in the arrival of imports from europe on the east coast. This shift in trade routes from west to east however does not do anything to counteract the high decline in shipping volumes.

This reflects a significant decline in the purchasing power of american consumers. As the world's largest consumer market the united states represents a significant portion of global purchasing power. A market which major exporters of the world have catered to. The US consumer market however appears to be drying up as rising fuel and food prices cut into the disposable income of average to even middle class consumers.

While many might have the impression that rising prices affect low bracket earners for the most part. Recent studies have concluded that many middle class and even high income earners also do not have much salary left over after deducting the high price of rent and other monthly fees. So it seems that everyone is tapped out due to cost of rising expenses.

What we have seen so far could only be initial reactions. With bigger shifts coming later on.

It seems that we are witnessing the beginning of the next large-scale crisis on a global scale - the fall of the Chinese economy! China's economy is one of the largest in the world, and the clear leader in Southeast Asia. But I have been saying for a long time that it is export-oriented, and is highly dependent on the US and EU consumption markets. And if the US, in the first place, and the EU in the second place, greatly reduce the consumption of goods from China, this will bring down an already not very stable economy.

This reflects a significant decline in the purchasing power of american consumers. As the world's largest consumer market the united states represents a significant portion of global purchasing power. A market which major exporters of the world have catered to. The US consumer market however appears to be drying up as rising fuel and food prices cut into the disposable income of average to even middle class consumers.

According to the Vietnam General Confederation of Labor, the ongoing order shortage has affected more than 630,000 workers in 28 provinces and cities from September-November. Nearly 570,000 workers have had their working hours reduced, another 34,000 plus have lost their jobs and more than 31,000 have had their contracts suspended and cases of unpaid leave or contract suspension.

-cut-
This reflects a significant decline in the purchasing power of american consumers
-cut-

when china usually see a year low of 1.4m and a high of 2.6m
having it at 2.47-1.96 in sept-nov.. is not that drastic.. it just means they are doing the same in winter as as they did in summer

the interesting thing is EU to US has picked up the winter demand away from china

According to this, the united states has seen a decline of imports arriving on the west coast from china. Accompanied by a simultaneous boost in the arrival of imports from europe on the east coast. This shift in trade routes from west to east however does not do anything to counteract the high decline in shipping volumes.

• U.S. manufacturing orders in China are down 40% in what a logistics manager described to CNBC as an unrelenting demand collapse.
• Asia-based shipping firm HLS recently told clients it is a “very bad time for the shipping industry.”
• China to U.S. container volume was down 21% between August and November.
• Chinese factories are shutting down two weeks earlier than usual ahead of Chinese New Year.

U.S. logistic managers are bracing for delays in the delivery of goods from China in early January as a result of canceled sailings of container ships and rollovers of exports by ocean carriers.

Carriers have been executing on an active capacity management strategy by announcing more blank sailings and suspending services to balance supply with demand. “The unrelenting decline in container freight rates from Asia, caused by a collapse in demand, is compelling ocean carriers to blank more sailings than ever before as vessel utilization hits new lows,” said Joe Monaghan, CEO of Worldwide Logistics Group.

U.S. manufacturing orders in China are down 40 percent, according to the latest CNBC Supply Chain Heat Map data. As a result of the decrease in orders, Worldwide Logistics tells CNBC it is expecting Chinese factories to shut down two weeks earlier than usual for the Chinese Lunar New Year — Chinese New Year’s Eve falls on Jan. 21 next year. The seven days after the holiday are considered a national holiday.

“Many of the manufacturers will be closed in early January for the holiday, which is much earlier than last year,” Monaghan said.

Supply chain research firm Project44 tells CNBC that after reaching record-breaking levels of trade during the pandemic lockdowns, vessel TEU (twenty-foot equivalent unit) volume from China to the U.S. has significantly pulled back since the end of summer 2022 — including a decline of 21% in total vessel container volume between August and November.



Image link:  https://i.ibb.co/TR4BmSv/chinese-imports.jpg

Asia-based global shipping firm HLS warned clients in a recent communication about the ocean transport business climate.

″It seems to be a very bad time for the shipping industry. We have the combination of declining demands and overcapacity as new tonnage enters the market,” it wrote.

HLS analysts are predicting a further 2.5% decline in container volumes and a nearly 5-6% increase in capacity in 2023, which will continue to negatively impact freight rates in 2023.

“The container shipping market will be further complicated by economic uncertainty, geopolitical concerns, and also the increasingly heated market competition,” HLS wrote.

OL USA CEO Alan Baer tells CNBC that there are some early signs of an inventory correction. Overall business volume and order flow out of Asia continue to be muted as carriers cancel more vessels, and there is little upside momentum leading into Chinese New Year. But Baer said, “Space has already tightened, so while demand is soft, space may be at a premium in January and throughout Q1. On the plus side, inventory depletion and the need to restart the order and delivery cycle appears to be inching upward.”

U.S. West Coast ports take biggest hit

HLS cited trade data showing that U.S. imports from Asia plunged in October to their lowest level in 20 months. The spot rate for a container from Asia to the U.S. West Coast has crossed the breakeven point, “with little room for further reductions,” it wrote.

The large West Coast ports of Los Angeles and Long Beach have experienced the largest drop in trade, according to Josh Brazil, vice president of supply chain insights at Project44, as shippers also rerouted some of their shipments to the East Coast to avoid the risk of a major union strike at West Coast ports.

HLS expects most carriers to extend their West Coast rates until December 14, holding at $1,300-$1,400 per forty-foot equivalent containers (FEU). However, U.S. East Coast rates are expected to drop by $200 or $300 to average $3,200-3,300 per FEU in the first half of December.

The recent rise in Covid lockdowns in China continues to impact manufacturing operations and delay cargo outputs. There are also local access obstacles for cross-province and cross-city transportation, mostly related to truck driver testing requirements, with trucking capacity to be largely affected.

The fight for vessel space, the rollovers of cargo, and the slow trucking is tracked by the CNBC Supply Chain Heat Map.

Blank (canceled) sailings data shows the cut in vessel capacity on the transpacific route (China to the U.S.) continues at a significant pace. The 2M Alliance of Maersk and MSC has suspended almost half of its U.S. West Coast services for December. The Ocean Alliance (CMA CGM, Cosco Shipping, OOCL and Evergreen) and THE Alliance (Ocean Network Express, Hapag-Lloyd, HMM and Yang Ming Line) have cut overall vessel capacity by 40-50% up to Chinese New Year.

As a result, space for shippers is considered tight for cargo bound for the Pacific Southwest route and service reliability has declined, with carriers including MSC and Hapag-Lloyd rolling (not accepting) cargo on sailings in an effort to make up time. According to logistics managers, this is creating two weeks of delay. MSC said in its latest notice to clients, “ETAs are indicative and subject to change without prior notice.”

The drop in manufacturing orders from the U.S. and the E.U. is also impacting Vietnam, which has been booming as a manufacturing hub as more trade moved away from China.

Since early this year, 12,500 companies were closed per month, a 24.8% increase year over year, according to the Vietnam General Statistics Office report. The combination of the lack of manufacturing orders and loan interest rates increasing from 6.5% to 13.2% in Vietnam led many companies to close factories instead of signing new order contracts, according to HLS. Canceled ocean sailings bound for Vietnam are up 50% for December.

Surprise European manufacturing increase

Unlike the decrease in orders out of China, trade data analyzed by Project44 indicates that the Europe-to-U.S. route is “one of the possibly most surprising and certainly most significant developments since early 2020,” Brazil said.

“This sharp rise cannot be explained by the pandemic alone. But a strategic shift from over-dependency on trade with China and geopolitical tensions over Russia are the main drivers of the EU-U.S. trade boom,” he said.



Image link:  https://i.ibb.co/1ssfr3B/european-imports.jpg

The global trading map is being rapidly redrawn, with EU-U.S. trade and investment in U.S. rising sharply as economic ties between the West and China are subjected to critical scrutiny. This year, the U.S. has imported more goods from Europe than China – a big shift from the 2010s, according to Project 44.

“For their part, Europe’s manufacturers battling sky-high energy prices and inflation are increasingly exporting to and investing in the U.S.,” Brazil said.

Germany’s exports to the U.S. were almost 50% higher in September year over year. Germany’s mechanical engineering sector has boosted its exports to the U.S. by almost 20% in a year over year comparison of the first nine months of 2022, according to Project 44.

https://www.cnbc.com/2022/12/04/manufacturing-orders-from-china-down-40percent-in-demand-collapse.html