Recently, a friend who is engaged in foreign trade posted an update on the platform:
Originally, canceling an order should be a bad thing, but for the current foreign trade boss, it may not be a bad thing: after all, if you don’t lose, you will make a profit!
As we all know, the shipping market has been “rising” recently. Affected by the epidemic, more and more countries are “locking down” for the second time, and ports in many countries are overcrowded. Lack of boxes, bursting of containers, dumping of containers, and crazy rise in shipping costs.
According to data, European freight rates increased by 170% year-on-year, and freight rates on the Mediterranean route increased by 203% year-on-year.
In addition, as the epidemic in the United States becomes increasingly serious, air transportation routes are also blocked, and shipping demand will continue to increase. Against this background, foreign trade bosses are facing soaring container freight rates. and surcharges, and judging from the current situation, shipping costs will continue to rise until a vaccine is widely available.
“Originally December was supposed to be a time for performance gains in the foreign trade market, but this year it feels special. It’s difficult!” said Xiao Huang, who has been a foreign trade salesperson for several years. “I still have 3 containers on hand, and after I finish shipping, there will be no more orders. Now it is difficult to receive orders. The RMB has appreciated sharply and freight has also increased dramatically. , if we go by the previous quotation, we may have to take the order at a loss, so we might as well take it slow.”
A foreign trade textile boss also said: “Our previous quotations were based on the exchange rate. 7 to quote, the current interest rate is 6.5, and the possibility of RMB appreciation in the short term is relatively high. As soon as we settle the foreign exchange, we will lose money. It is no exaggeration to say that we will lose money every time we take one order!”
The editor also learned that for relatively small foreign trade companies in Jiangsu and Zhejiang, the best interest rate for survival is 7. After reaching 6.7, foreign trade companies have almost no profit.
Because of this, textile foreign trade bosses also canceled orders in March and April “Heartbroken”, but the latest boss is indeed “secretly grateful”!
While foreign trade bosses are struggling with whether to accept orders and how to quote prices, many textile bosses in the domestic trade market are also worried about this year’s receivables!
Mr. Zhang, who has been in the fabric trade for more than ten years, said helplessly: “In previous years, before the Chinese New Year, I would settle the fees of all suppliers, including gray fabric factories, dyeing companies, etc. Factory, finishing factory, etc., will not leave any arrears for the New Year, but I may have to default on some payment this year!”
He, who is mainly engaged in the sales of down jacket fabrics, said that this year due to the market situation In addition, the cold winter came late, and customers were slow to receive cold-weather clothing fabrics, and they also encountered chargebacks. As a result, the gray fabrics purchased at a high price in October were now “rotten” in their hands, making it difficult to cash out. “Business is not good, receivables are in arrears for longer, and our lives are also difficult!”
Under the influence of the epidemic, demand in the entire textile and apparel industry has shrunk significantly this year, and overcapacity in the fabric market has inevitably led to low-price competition. Lowering receivable requirements has also become a “magic weapon” for bosses to take orders.
“Recently we have begun the finishing work. Although goods are shipped out of the warehouse every day, it is less than half of the same period in previous years. I have begun to plan to ask for accounts in advance, and some debts are owed. We are no longer prepared to take orders for goods, and new customers are doing cash business.”
According to the practice of previous years, the domestic trade market began to enter the off-season one month before the holiday, and the bosses also began to The focus of work has been shifted from production to the payment process, but judging from the current situation, this year’s payment is more than half a month earlier than in previous years. The reason is still financial constraints.
“Almost 40% of our payment has not yet been paid back. Some old customers have been delayed for half a year, and most of the payment periods are around 3-4 months.” Another Mr. Chen, a textile boss who produces pongee and polyester taffeta, said, “The profit from receiving orders this year is not high, and a lot of payment is still owed outside. Before the New Year, we need cash to stock up on raw materials and pay bonuses, so we are prepared Start asking for accounts in advance!”
For textile bosses, the experience in 2020 is relatively “dark”. In their words: “Having been in the industry for more than ten years, from I have never encountered such a market situation.”
On the one hand, the impact of the epidemic on the global economy is still deepening. Although there is good news about the vaccine, it is also currently facing a shortage of glass bottles. In this predicament, if the vaccine is widely available in March as originally planned, there will basically be no major reversal in the overseas consumer market before March, and it will not have much of a boost to fabrics.
On the other hand, the traditional Chinese Spring Festival will be ushered in in two months. Judging from the situation in previous years, the trade market will weaken significantly after New Year’s Day, and various production links will be affected.��It will gradually end and the market will also enter a vacuum period. It will not be until after the Lantern Festival in the second year that market demand will slowly begin.
Judging from various factors, the market situation may usher in a turning point around the Qingming Festival next year. In this stalemate market situation, it is still necessary to hold on to your capital and be safe. After all, the two key factors that determine the survival of a company are always: inventory and cash flow!
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