China, the ‘world’s factory’, is losing manufacturing dominance

China’s recent “no-coronavirus” policy has robbed China of market share in manufacturing and exports to its Asian neighbors, further eroding its longstanding dominance in global trade.

Data shared with CNBC by transportation economy firm MDS Transmodal shows China has lost ground in key consumer categories such as clothing and accessories, footwear, furniture and travel goods, as well as a share of exports from minerals to office technology. declining.

Antonella Teodoro, Senior Consultant at MDS Transmodal, said:

“When we drill down into individual commodity groups exported from China, China continues to lose market share and Vietnam is gaining importance in the international landscape,” Teodoro said.

This view is in line with other recent market research, particularly on Vietnam’s interests.

Teodoro said Vietnam’s proximity to China and cheap labor are reasons why Vietnam is considered a suitable alternative.

Shipping operator MSC has announced that it will create a new transshipment container terminal project near Ho Chi Minh City in July, together with Vietnam Maritime Corporation. When completed, the terminal will be the largest in the country.both Maersk and CMA CGM are investing in expanding their facilities in the region.

“Shipping lines are looking for new markets and are investing and expanding in new markets,” Teodoro said. “They see demand and are creating a market with these investments.”

Competition was intensifying years before Covid. Vietnam has seen a nearly 360% increase in long-distance trade since 2014, depriving China of most of its manufacturing trade. This is the year the country started investing in the shipping and manufacturing sectors.

According to MDS Transmodal, Malaysia and Bangladesh have taken apparel manufacturing away from China, while Taiwan saw a slight increase in metal manufacturing.

According to Akhil Nair, senior vice president of Asia-Pacific products at SEKO Logistics, alternative sourcing locations to China, initially limited to fashion and footwear, have been sought since the US trade tariffs in 2018. The combined impact of the COVID-19 lockdowns in China (Shenzhen, Ningbo, etc.) and disruptions to his supply chains has led Nair to say, “Especially in countries like Vietnam, clients hedging sourcing areas are rapidly increasing. increased to .

According to Nair, SEKO is witnessing an increase in the flow of raw materials within Asia, followed by exports of finished products from Vietnam and other Southeast Asian countries.

“While the recent Chinese lockdown will not affect vessel operations or terminals themselves, in some cases other highly dependent parts of the supply chain such as trucking, CFS warehouses and container yards will remain impacted. is clear,” said Nair.

Total TEU (container) capacity for ships leaving Chinese ports has declined since the pandemic lockdown began in early 2021, according to data from cargo tracking firm Project44.

According to Josh Brazil, Project44’s vice president of supply chain insights, the ship capacity of about 11.2 million TEUs per month before 2021 will drop to 8.6 million TEUs leaving Chinese ports in September. It shows a 23.2% decrease in vessel capacity leaving port.

Ocean bookings tracked by FreightWaves SONAR show a continued decline in shippers ordering container shipments with ocean carriers.

Logistics managers said CNBC’s orders for cargo arriving in the US from China in November are expected to fall by 40% to 50%.

OL USA CEO Alan Baer said: “Ship operators have increased the number of blank sails and have ended several vessel strings that draw about 30,000 TEUs per week for the USWC space.”

The world’s largest port and the world’s third largest container port, the port of Ningbo is the latest Chinese trade hub to see the impact of the government’s “Zero Covid” policy. Global maritime analytics provider MarineTraffic said last Thursday that he had a Covid outbreak detected that spread to Beilun, the area with the most terminals at Ningbo port, leading to a drop in productivity.

On Monday, MarineTraffic reported what supply chain in-transit visibility lead Alex Charvalias described as a “significant drop in container ship arrivals at the port of Ningbo,” attributed to the latest Covid outbreak in the region. I tracked what to do. “MarineTraffic’s data looks like the number of vessels arriving the next day was higher than the day before, but we’re seeing more TEU capacity awaiting port restrictions in the last few days,” he said. He said. .

These delays also show up in the latest CNBC Supply Chain Heat Map.

said Joe Monaghan, CEO and President of Worldwide Logistics Group. “Many Ningbo warehouses could not be opened to receive cargo and could not pick up empty containers from container yards, and truck drivers had to apply for special passes for deliveries to the Ningbo dock area. The situation in Ningbo could last for a week.”

CNBC Supply Chain Heat MaThe p data provider is Everstream Analytics, an artificial intelligence and predictive analytics company. Global freight booking platform Freightos, creator of the Freightos Baltic Dry Index. logistics provider OL USA; supply chain intelligence platform FreightWaves; Supply chain platform Blume Global. Orient Star Group, a third-party logistics provider. Global Maritime Analytics Provider Marine Traffic; Marine Visibility Data Company Project44. Shipping data company MDS Transmodal UK. Sea and air freight benchmarking and market analysis platform Geneta; Sea-Intelligence ApS, a leading provider of research and analytics; Crane Worldwide Logistics; DHL Global Forwarding; Seco Logistics, a freight logistics provider; and planets, Provider of global daily satellite imagery and geospatial solutions.