China’s ports are heaped with idle containers and foreign trade companies are facing struggles due to a reduction in orders, causing some to go bankrupt. The China Container Freight Index (CCFI) showed a year-over-year decline of 11.2 percent in the composite index in January, with the index for European routes falling by 16.7 percent, and the Western U.S. and Eastern U.S. routes dropping by 7.8 percent and 9.8 percent, respectively. This marks the fifth consecutive month-over-month decline since September last year.
China’s Ministry of Transport released port data in January showing that the growth rate of cargo through-put in Chinese ports dropped 1.9 percent year over year. But the reality is worse than the official figures, with many Chinese ports already stacking up an increasing number of empty containers. For example, Nansha Port in Guangzhou saw the number of empty containers exceed 90 percent of the dock stockpile, a record high since March 2020.
The decline in exports is due to weakening external demand and reduced orders, compared with last year’s interrupted supply chain and inability to fulfill contracts. A manufacturing Purchasing Managers’ Index (PMI) for January published by the U.S. Bureau of Labor Statistics (BLS) showed that the new export orders index rebounded to 46.1, slightly higher than 44.2 last December. However, it is still below the 50—the threshold value that separates contraction from expansion. China is also losing its status as the world’s factory, which is one of the factors leading to sluggish exports.
Since 2022, a significant number of Chinese foreign trade companies have been facing pressures from a steep drop in orders. Many have gone bankrupt due to delayed shipments and abandoned orders, resulting in excessive raw material inputs imbalance and inventory backlogs. The situation could be a major hurdle that will determine whether these companies can survive or not.