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Logistics newest information from Asia weekly.

21 Sep 2022

By Benny Lim.    Photo:Nothing Ahead

Tianjin Port opens Belt and Road and RCEP new routes

"Mediterranean Ada 2" represents the opening of the "Mediterranean Southeast Asia Route", which is the third new route under the Belt and Road Initiative and the Regional Comprehensive Economic Partnership (RCEP) opened by Tianjin Port this year.

Tianjin Port has successively opened new routes to increase the flight density of Tianjin Port’s Southeast Asia near-ocean routes. The “Mediterranean Southeast Asia Route” is the first Southeast Asia route opened by Mediterranean Shipping (MSC) in Tianjin Port in recent years, focusing on serving Vietnam, Thailand, Singapore, In RCEP member countries such as Malaysia and Indonesia, five to six 2,500 to 3,500 TEU container ships operate in weekly shifts.

The newly launched Mediterranean Southeast Asia pertiwi route can directly sail from Tianjin Port to Southeast Asian ports, meeting the current requirements of the northern Chinese mainland market for Southeast Asia transportation capacity and customer delivery time. Tianjin Port serves ships with high operating efficiency and overall lower trade costs.

 

Orders "fly to the southeast", exports fell by 70%

Since the beginning of this year, all parts of China have actively taken relevant measures to curb the spread of the epidemic. The textile and apparel markets have been temporarily closed, and market sales have decreased significantly. willingness to consume.

China is the main producer of cocoon and silk raw materials in the world. The output of silkworm cocoons and raw silk accounts for more than 70% of the global output, ranking first in the world. Due to the advantages of the origin of raw materials, my country's cocoon silk and silk satin dominate the international market output and price trends, and the silk industry has become the country's pillar industry for foreign exchange earnings. However, due to the impact of the epidemic, the demand for orders has dropped significantly, largely due to the "diversion" of Southeast Asian countries.

Many export companies have dropped by 70% compared with before the epidemic. Especially this year, the epidemic has become more and more strict, and the logistics is not smooth, and the cost is high, which has caused orders to be transferred to other emerging economies that have resumed work and production, such as Vietnam.

The supporting capabilities of Southeast Asian and other real estate industries are gradually increasing. In particular, Vietnam has developed rapidly in the silk raw material processing industry in recent years and has undertaken a considerable number of orders from India, Thailand, Pakistan and other places.

 

Production lines move to Southeast Asia at an accelerated pace

In terms of tariffs, Vietnam's textile exports to India have a tariff of 0, while China's textile exports to India have a tariff of 13%.

In terms of labor, the silk reeling factory needs female workers the most. Although the population of Vietnam is not large, the mature labor force is very rich; the working hours in Vietnam are 9 hours a day, and the daily salary is about 100 yuan, compared with 8 hours in China and 150~ The daily salary of 200 yuan is cheap; monthly, Vietnam works 22 days a month, while domestic work 26 days a month.

 

Invest and build factories in Southeast Asia

Excellent investment conditions have attracted many large enterprises to build factories.

The Danish Pandora Group (Pandora) and the Vietnam-Singapore Industrial Park Joint Venture (VSIP) signed a cooperation agreement in the administrative center of Binh Duong Province to invest and build a factory in VSIP Industrial Park No. Pandora Group will invest 100 million US dollars to build a world-class high-end jewelry processing factory in Binh Duong.

In addition, Apple's thinking on the layout of the industrial chain is changing. AirPods Pro 2 will start mass production in Vietnam in the second half of 2022. This would be a case of Apple mass-producing major products outside of China. The change in Apple's supply chain strategy reflected behind it is undoubtedly an important signal.

The 21st Century Capital Research Institute found that several A-share fruit chain companies have also chosen to build factories in Southeast Asia such as Vietnam to cope with changes in Apple's supply chain. Meanwhile, Foxconn and Malaysian firm Dagang NeXchange Berhad (DNex) said the two companies would form a joint venture to build and operate a 12-inch wafer factory in Malaysia to meet growing demand for semiconductors for electric vehicles.

 

The below is the feedback from China and Southeast Asia branches in week 35,

 

Shenzhen

Yantian Terminal still implements ETB-7 days to pick up the container. Due to factors such as the shipping schedule DELAY and the unstable epidemic situation, the additional cost has become normal.

Shenzhen air freight: The market volume is not much, and the freight has dropped.

Hong Kong Seaport: Due to the epidemic, transportation through the port is still hindered. Currently, there is a limit for vehicles in the two places, which requires ranking yuan, and needs to be unloaded at the warehouse and then connected by vehicles, which is expensive.

 

Dalian

In terms of transportation, truck drivers still need a 24-hour nucleic acid report to enter and exit the high-speed bayonet.

In terms of import and export, epidemic prevention and control requires that people entering and leaving the port area need to wear protective clothing and disposable medical surgical masks.

 

Qingdao

The LCL warehouse implements an appointment before delivery, and the driver needs to make an appointment in the corresponding APP

The epidemic situation in Jimo District is still severe, and some areas are still blocked

Ningbo

There have been many typhoons recently, and the late opening is serious

LCL warehouse entry has returned to normal

Truck drivers still need a 24-hour nucleic acid report, green code plus travel code, and some areas need to report or apply for a pass one day in advance

 

Vietnam

Petrol prices have continued to decrease by more than 1,000 VND/liter in the recent operating period. 

This helps businesses reduce input cost pressure, especially in the transportation sector. 

Many businesses have reduced freight rates, along with many consumer goods have decreased slightly.

The decrease in gasoline prices not only affects the reduction of freight rates, but also the price of goods in the markets ends the high price increase.

 

Thailand

Thailand enhances “REAL-TIME CROSS-BORDER QR PAYMENT”.  The Bank of Thailand (BoT) recently expanded the cross-border payment service by recently commencing a cross-border QR payment linkage with ASEAN countries including Cambodia, Vietnam, Singapore, Malaysia and Indonesia. Under this linkage, buyers and sellers in different countries can use payment applications on mobile to pay and received payment instantly through a QR code across borders. This transaction is real time and cost effective via this mode.  And this service will expand the cross-border payment ecosystem to other countries soon. This is cheaper, drive faster and more transparent digital economy.

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