The cost of importing LVT from China, where the bulk of product is manufactured, has reached an all-time high. The reasons for the increased cost to import LVT are three-fold: the weak dollar versus the yuan; the fact PVC chip is at record levels price-wise; and increased surcharges on freight activity owing to limited availability.
The dollar’s value relative to the yuan has declined 9.7% to 6.5 from its May high of 7.2. In addition the cost of PVC chip has increased 29% in three months, to $8512.50/ton. The freight container price rise is owing to increased demands for imports leading up to the holidays as well as the post-lockdown restocking, limited air freight capacity, incremental demand for stay-home goods and personal protective equipment (PPE), reports Reuters.
‘Shipping rates have surged over the past month because of an acute shortage of containers and shipping space,’ reports YiCai Global, quoting Lou Lei, general manager of Yiwu Tianpeng International Freight Forwarding. ‘Exporters have to sit back and wait their turn despite explosive export demand.’
‘One container can accommodate CNY50,000 to CNY60,000 ($7,620 to $9,410) worth of products, but the freight (rate) for one container has risen 30% to tens of thousands of yuan,’ said Lou, whose company serves Yiwu in China’s Zheijang province.
‘The world’s largest shipping companies have even resorted to a lottery system to determine whose goods to move,’ according to a staffer with a major Shanghai-based freight forwarder.