Sofa factories, which had been difficult to obtain due to explosive orders for the first time in years in the second half of 2020, will encounter unstable signals as the first half of the year after the 2021 Spring Festival.
Shipping rates, which began to rise in 2020, continued to rise in 2021, asking Chinese sofa factories to delay shipments of goods already ordered due to high shipping rates for overseas buyers who ordered large quantities in the second half of 2020.
Shipping costs rose to $18,000 in 2021 from less than $4,000 before the 40-foot container-based Corona on the China-US route. However, official data such as the news show that the shipping cost of the China-U.S. route has risen to $8,000 per container, but the shipping cost of sofa factories, which are relatively small and medium-sized companies, has doubled to $18,000 per container.
Shipping rates of large Chinese companies that have already contracted container volumes with blocks, like plane tickets from travel agencies, have risen to a level similar to news, but fares of sofa factories that contract containers have risen beyond imagination at that time. In addition, due to insufficient containers, port handling capacity, and ship waiting time, the supply is smaller than that of large companies, making it difficult for the relatively weak sofa factories to even secure containers and send out sofas in time. In this situation, buyers have delayed shipment until the container ships have empty space in order to find a cheaper container fare, so most factories have piled up sofas that are scheduled to be shipped to the exhibition hall or office due to lack of space.
Although the down payment has been received from the buyer, the problem of financial pressure and space shortage at the sofa factories has become more and more serious.
The sofa factories, which had already been produced in the first half of 2021, were filled with warehouses due to buyers' waiting requests and reduced production time to reduce costs, and anxiety grew as buyers' orders decreased in the second half of 2021. In the meantime, we hear that some buyers are moving their orders to Mexico or Eastern Europe. This was the part that I was most concerned about in "The Butterfly Effect of Covid-19 - China's sofa factory in 2020, the predictive and unstable boom," and it was a rumor that the supply chain was moving away from China. But the rumors are not just rumors, but facts show that the biggest increase in sofa exports in 2021 was in Poland, where U.S. and European buyers moved to Eastern Europe, and in addition to Middle Eastern buyers visiting Turkey in early 2022, African and even U.S. buyers came to Turkey's furniture show in early 2022.
Meanwhile, the price rise of raw materials, which began in the second half of 2021, has accelerated further due to Russia's invasion of Ukraine, putting pressure on all sofa factories to rise in cost. Recently, China's RMB exchange rate has been adjusted to 6.6RMB, but profits at Chinese sofa plants have fallen to the worst level due to the Chinese government's intentional RMB strength of 6.3RMB per dollar from the second half of 2021 to March 2022. Orders from Korea and Japan, which had maintained some volume despite the high price of shipping, have recently fallen due to the sharp rise in exchange rates, and China's sofa plants have begun to withstand reduced working hours, but there is no hope of improvement in the situation.
[High shipping rates and supply chain changes]
The sharp rise in shipping fares is due to a sharp drop in port handling capacity due to COVID-19 and a logistics chaos due to a lack of truckers, but it was caused by the greed of shipping companies to make money through this opportunity. Among them, the greed of Korean and Taiwanese shipping companies, led by China, is the most direct cause of the change in the supply chain, especially Chinese shipping companies, eating away at the future of the Chinese economy and making a lot of money.
The recent process of Samsung and SK turning domestic production lines from Vietnam and setting up factories in the U.S. is based on expectations that the post-Corona future will be divided into blocs in the past open international trade, and is aimed at escaping political or regional risks.
As a result, Chinese shipping companies have broken the supply chain of Chinese factories and Russia has highlighted political risks around the world, so imports from China are less than they are now, but less likely to increase.
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