The Chinese government has implemented strict control on the use of electricity that will seriously affect the production at many factories in China.
Power rationing and forced cutbacks in factory production are aimed to comply with environmental requirements. The regulations have been implemented in more than 10 provinces, including the economic powerhouses of Jiangsu, Zhejiang, and Guangdong.
In Zhejiang, more than 160 enterprises in the textile, dyeing, and chemical fiber industries have been ordered to stop production to meet energy consumption targets. In Ma’an, about 80 percent of the enterprises have been issued a production shutdown order notice. Emergency power cuts have also been ordered in 14 cities in the northern province of Liaoning.
Some organizations are reporting the impacts of the power restrictions in presentations on mainland stock exchanges. Meanwhile, coal prices are hitting record highs and are causing many power plants to become unprofitable to operate.
China’s energy crisis is creating disruptions in the already strained global supply chain.
How will this situation affect us?
Although the trend in the coming months will be towards stabilization and unblocking of the collapsed ports, it is believed that the tension in the market will be maintained through Blank sailings, Rollings, etc. There may be an initial price drop and, although demand for space will be reduced, there will still be space problems. Sailings in the Chinese main ports will be more stable as they will have more equipment and capacity than in the smaller ports. The shipping lines claim that there will be no improvement in space and prices until after the Chinese New Year. Beyond that date, we don’t know what the market reaction will be, although everything leads us to believe that we will be in an unprecedented peak season.
What can we do?
- Manage logistics through all the means of transport we have at your disposal to optimize loads in the most effective way.
- Hold working meetings with your teams to review forecasts and priorities more frequently.
- Advance bookings as far as possible to guarantee the availability of goods.
Please do not hesitate to contact us with any questions you may have about the market situation.