Freight forwarding companies in China are becoming increasingly bullish in respect of the global financial crisis. Demand for China import across the globe has been a major factor over the last few decades and China's exports have experienced quick growth. This has brought China to the position of being the world's largest exporter in 2009. In spite of a significant fall off in demand for China imports in the two years before 2010 as the economic slowdown and credit crunch has meant a drop in disposable income for many consumers in the main markets for China imports such as the U.S.A and the UK, the future is cautiously positive as there now starts to be indications of improvements in China's key export markets. It is therefore expected that China will be able to regain its position as world export leader and that the prospects of the international freight market will recover in tandem. Following an approximate twenty% drop in flows of China import goods being sent overseas by shipping companies in 2009, the market is expected to increase by about 10% in 2010, so this should reassure every shipping company and freight company that has found it difficult to maintain profitability during the economic slowdown. It will also help reassure the China government which has taken emergency measures over the last couple of years to try to protect the china import business, in the face of a decline in factory order books, which in some areas in China has resulted in factory closures and increasing unemployment, with the many social problems that can cause.In Guangdong Province, there have been such a large number of factories failing without paying their employees that some other employees are leaving and demanding payment in advance of their employers going bankrupt.The problems have been made worse by some American retailers taking longer to pay for their China import goods, some for example taking 120 days to pay instead of the usual 30 to 45. This means that their Chinese need to borrow the difference to cover the shortfall and for many, this has not been possible, so businesses have closed, with a knock on effect for businesses in the freight transport and freight services sectors.Victor Fung, Chairman of the Li & Fung Group, the supply chain management group that joins} factories in China with retailers in the United States and Europe looking for China imports, was quoted in 2009 as saying: "Trade finance is collapsing. We've got orders we can't ship right now.' It is clear to see that the impact of this has been significant on many international freight businesses, such as freight services and shipping companies.During the downturn, logistics managers have often been able to negotiate significant price reductions with shipping companies, as some ships have left} China's ports with significant capacity still available.The downturn in demand for China imports has not been even across all parts of the economy. Consumer electronics manufacturers have been amongst the hardest hit with a large decline in consumer requirements for mini hi-fi systems. To help counter the problems, the China government has introduced a raft of policies aimed to help businesses continue in the face of the drop in demand. These have included directions to state owned banks to make available more lending to small and medium sized exporters, support for letters of credit and a restoration of export tax rebates for the textile industry. Also, there has been a halt to raising of the minimum wage, again to help employers weather the decline.One of the factors that has badly affected China imports is the number of trade protection measures launched by other developed nations and the growth of trade protectionism.However, with the robust actions taken by the Chinese government to try to lower the impact of the economic slowdown and the slowly improving economies worldwide, the outlook for international trade is now looking more positive. This augers well for the future development and strength of freight transport and the international freight sector in China.
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Freight forwarding companies in China are getting more bullish in the face of the global financial situation.
Stephen Willis is Managing Director of RW Freight Services a UK based freight transport company, established in 1971 and operating worldwide freight forwarding services including specialist freight services to and from China
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