The pandemic has affected the value of the US dollar, especially sea freight costs, which have almost doubled. As consumers, we should expect prices of Chinese products to rise, including tires.

 

The first phenomenon is linked to the depreciation of the US dollar against most currencies, which began last summer. For example, the US-CNY (Chinese currency) pair has lost 10% while the US-EUR pair has lost almost 9%. As a result, countries selling raw materials in US dollars had to increase their prices and Chinese companies that usually pay in US dollars are paying more for their raw materials.

 

 

 

The second phenomenon, which is more worrisome, is the increase in sea freight costs. For example, it used to cost about $4,000 to bring a container into the country and now, it can cost up to $8,500! In addition, your goods may be ready for transport but due to a shortage of empty containers in China, you have to wait. In my opinion, the most likely explanation is that because China has emerged from the pandemic faster than other countries, their production capacity has returned to normal faster than the rest of the world. This means that there are more containers that have left China compared to those that have returned with goods. According to our information, it is particularly necessary to return empty containers by ship these days… hence the increase in transport costs. In these uncertain times, it is not uncommon to be charged additional fees for orders placed months ago.

 

 

Meanwhile, we must prepare ourselves to cope with this situation as long as this pandemic has not been brought under control.

 

The LanOTR team