Interesting Times

It’s an often quoted cliche that there is a Chinese curse which says “May you live in interesting times”. Nevertheless, each new development in the market, email from supplier or service provider, rumor of supplier bankruptcy, price increase, price decline or shortage brings that thought to mind.

Recent letters from our logistics company warn of severe shortages of containers from Asia and dramatic increases in container costs to “make up for” shipping company losses over the last few years. As if these shipping companies didn’t have themselves to blame by adding far too much capacity during the boom times and not wanting to bite the bullet when prices continued to fall. What do they think will happen to all that capacity when times get better and shipping volumes increase? These surcharges may not even last very long after the end of Chinese New Year.

With many Chinese factories closing down or moving to more profitable or higher tech products,there will be more business for factories in other Asian and Pacfic countries such as the Philippines. There will also be more new and inexperienced Chinese factories entering the market without the technical skills or Chinese government subsidies which the older factories enjoyed and product quality could suffer.

The traditional and dominant American/Chinese import company, which designed or specified product in conjunction with several factories, used US trade shows to find out what the market wanted and then imported large quantities of goods to warehouse in the US, is giving way to smaller importers who sell direct to commercial users and consumers, often using only the internet for product offerings. The demise of the trading company Pacific Rim a few years ago, began this trend.

More about this in a later blog. So far it’s fun as well as “interesting”