September 2020 – 7seassourcing

Pain & Suffering in Shipping

September 23, 2020
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With a few days still left to go until Chinese New Year, the situation is going from bad to worse, the current situation continues to break all known records. All space is now more or less gone, everything is booked up three to four weeks out. We still see premium services available in some ports, but most of these are fully booked too.

Due to Covid-19 precautions, the ports are working with limited labor and stacked shifts. The labor limitations and the volume decrease the efficiency of the terminal operations. Containers have been misplaced, stacked, buried and there’s not enough room to accommodate an efficient flow of goods. These problems negatively impact the dwell time for rail moves, as well as increase wait times for truckers trying to pull loads from the port or return empties. The vessels keep on arriving, and they are stuffed to the brim with cargo.

“Containers we exported are stuck everywhere in the world and cannot return in time because of the pandemic and all procedures from clearing customs and logistics to storage are very inefficient,” said Mark Ma, owner of Seabay International Freight Forwarding Ltd., a company in Shenzhen that handles goods sold on platforms such as Amazon.

The market traffic light for this week continues to flash all the wrong signs, however, we are seeing the rates holding steady. US exports are somewhat in a better position, and people having both imports and exports are encouraged to utilize street turns and dual transactions at ports by swapping empty containers with full containers. The more that can be optimized from outside the port complex/rail yard, the fewer disruptions will be experienced.

At 7 Seas we will continue to monitor the situation and do everything in our power to keep things on track for our customers. We thank you in advance for your understanding and continued support of 7 Seas Sourcing, LLC.

7 Manufacturing Countries for 7SS

September 23, 2020
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Did you know that the United States was number 4 in Manufacturing Countries in 2010 . In 2016 the United States moved up to the number 2 spot and continues to position itself among the worldwide pioneers in innovative work (R&D) exercises by putting resources into top colleges, R&D ability, and funding, ventures that help move the organization higher in by and large manufacturing competitiveness. At 7 Seas Sourcing we do work with a number of USA manufacturers, but pricing can be an issue for a lot of customers.

In today’s industry it is imperative to manufacture a high quality part at a reduce cost. That requires choosing not only the best manufacturing method, but also what country best fits your business and product. Below we listed 7 manufacturing countries that are alternatives.

China- The country is Vertically integrated to handle almost any manufacturing process from a plastic injection, Stampings, Forgings, Castings, Machine parts, etc. There low cost labor force coupled with their growing manufacturing education makes them a formidable country for most any manufactured item. China and the USA are the world’s Job Shop.
India – India is the third-largest economy in purchasing power parity after the U.S. and China, additionally it has a large population of engineers and factory workers, its intellectual property is widely respected. You can manufacturer about anything here as it is very similar to the USA and China, but Stainless steel parts are exceptionally attractive in this country. That coupled with the newly imposed Tariffs on China to the USA makes India a very formidable option to China.
Taiwan- For an island Taiwan has over 20 million people and well educated work force. They can handle a number of different manufacturing process similar to the USA, China and India. There low cost labor force coupled with their growing manufacturing education makes them a formidable country for most any manufactured item. China and the USA are the world’s Job Shop.
Vietnam – This small nation is rising in the manufacturing industry and becoming one of the top manufacturing countries in the world. It’s considered a developing nation, but Vietnam is capable of quality manufacturing. Pricing is usually lower than China, but the quality level is definitely something that needs to be monitored consistently. There is a number of China owned factories in Vietnam as well that is definitely helping bridge this gap. They specialize in a number of manufacturing process from Cut and Sew, Stamping, Plastic Injections, and more.
Thailand – Thailand is considered one of Asia’s major automotive, electronics and petrochemical production hubs. Its success is partly due to its existing infrastructure and relative ease of doing business. Thailand is the ⦁ largest producer and exporter of natural rubber in the world. Thailand’s natural rubber resources can reduce production costs for rubber products. They also have the ability to handle a number of wood products like frames and furniture.
Malaysia – Malaysia and Thailand is similar in their manufacturing process, but Manufacturing activities in Malaysia also include electronics, smelting, logging and timber processing. Electronics is one of the major growth industries within the country.
Mexico – Mexico is similar to China and India in the aspect it can manufacturer anything. The electronic industry has become widespread in the capitol city of Jalisco and it is known as the epicenter of the electronics sector. This on top of new trade acts with the United States makes Mexico an attractive option, but the pricing is not always advantages over the United States.

If you are like many other business struggling to figure out what is best for your company please feel free to reach out to a 7 Seas sales representative and see how we can help. We look forward to helping make the World work for you!
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USD to RMB Exchange Rate

September 23, 2020
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Currently, what ignites market’s interest has been focused on a few questions:

What is the Yuan’s exchange rate with the US Dollar?
Is the trend sustainable as the global economy normalizes with vaccination advancement?
Where will the RMB exchange rate go at end-2021, particularly will it break the psychological level of 6?

What is the yuan’s exchange rate with the US dollar? The exchange rate between the Chinese yuan and the US dollar, is the value of one currency against the other. The yuan’s exchange rate to the US dollar is quoted as USD/CNY to represent how many yuan it takes to buy one US dollar. In China’s case, a lower yuan exchange rate figure indicates a stronger Chinese currency as it means it takes fewer yuan to purchase one US dollar.

China’s Yuan (RMB) has gained more than 10% against the USD since June 2020, and currently stands at about 6.45. This has eaten into profits as many of the exporters take payment in Greenback, due to suppliers and staff being paid in Yuan.

Is the trend sustainable as the global economy normalizes with vaccination advancement? Normally, except for the factor of historical high interest rate differentials which might last for a longer period, other factors will be normalized as the global economy recovers with the vaccine roll-out, as a result it will not become a reason to support the RMB exchange rate any longer. First, the economic fundamentals to support RMB in the past year such as growth divergence and exceedingly strong exports will sooner or later normalize together with the global economy recovery, although the timing is not certain yet. The continuing Covid-19 pandemic remains the prime risk to the global economy which is fraught of uncertainties of vaccine effectiveness and distribution. That means, the strong RMB momentum might only remain before the global economy normalizes.

Where will the RMB exchange rate go at end-2021, particularly will it break the psychological level of 6? Continuing flows into China’s bonds and stocks has one yuan bull predicting the currency could strengthen to a level not seen in nearly three decades. According to Liu Li-gang, chief China economist at Citigroup Inc, Bloomberg reports predicts the currency could rally by 10 percent to 6 per US dollar or more by the end of 2021. The yuan has not been that strong since late 1993, just before China’s unification of official and market exchange rates triggered a plunge in the currency. A rapid advance in the yuan could impair Chinese exports by making them more expensive. That will in turn hurt China’s growth, because outbound shipments have emerged as a key driver for the economy on global demand for its pandemic-related goods. Also, sustained appreciation in the currency could attract speculative money inflows, fueling local asset bubbles and creating financial risks. Policy makers will seek to slow the advance, said Dariusz Kowalczyk, senior emerging-markets strategist at Credit Agricole CIB.

At 7 Seas we will continue to monitor this trend and help our customers minimize the effects of the currency change. We can also help by exploring other low cost country alternatives. Please let us know how we can help.

Monthly Archives: September