As a manufacturer of household glassware, how should we deal with the impact of rising ocean freight on the daily glassware industry?

Due to the instability of the international situation in the Middle East, the surge in shipping costs has led to a sharp increase in export costs, and China's daily household glassware exports face major challenges. Global shipping costs have been rising since the second half of 2023, especially in early 2024, when shipping costs reached a historical high. Glassware manufacturers and exporters are anxious and helpless about this.

The rise in shipping costs is mainly due to the following reasons:

The impact of the Israeli-Palestinian conflict: The Israeli-Palestinian conflict has led to a deterioration in the security situation in the Middle East, especially posing a threat to shipping routes in the Red Sea and the Mediterranean. It has led to operational disruptions or reduced efficiency in neighboring ports, which in turn affects the loading unloading, and transshipment of goods. It has also indirectly led to rising international oil prices, which has pushed up shipping costs, and all the cost increases will eventually be passed on to exporters and consumers.

The continued impact of the global epidemic: Although the epidemic has eased around the world, the impact on the shipping industry has not been eliminated. Port congestion, shipping delays, insufficient capacity, and container shortages have caused container freight rates to rise sharply, further pushing up overall shipping costs.

Impact of rising shipping costs on the export of household glassware

Daily household glassware is not a high-value product, and its export depends on large-scale, low-cost shipping services. However, the sharp rise in shipping costs has greatly increased export costs, which directly affects the competitiveness of Chinese daily glassware in the international market. Some small and medium-sized glass export companies are particularly affected and even face the risk of suspension of production. The main impacts are as follows

Corporate profit margins are shrinking: Due to the sharp increase in transportation costs, the export profits of glass products have shrunk significantly. Some import companies have to increase product prices, but this will weaken their competitiveness in the international market.

Decrease in foreign trade orders: The high shipping costs have discouraged overseas buyers and the order volume has been greatly reduced. Many companies have stated that new orders have decreased significantly in recent days, and even orders have been canceled. Due to the limitations of the household glassware process, the production of glass cannot be stopped, so many factories will have insufficient orders and cannot maintain the normal work of workers, resulting in the loss of labor, which is not conducive to the operation of the factory.

Loss of Chinese market share: Due to the increase in freight rates, the price of Chinese glass products has risen. Many importers have turned their orders to other countries, and domestic glass orders have decreased, but this is a severe challenge for China's glass manufacturing industry.

A crisis is a crisis, and there are opportunities in a crisis. In this case, how can our Chinese companies save themselves?

Try the following methods. First, companies can optimize supply chain management, improve transportation efficiency, reduce intermediate links, and minimize transportation costs. Second, expand diversified markets. In addition to traditional export markets, companies can actively explore new markets, diversify risks, and find more business opportunities. Third, through technological innovation, increase product added value, cater to market trends, and enhance product market competitiveness to resist the adverse effects of rising costs. Fourth, strengthen cooperation with shipping companies, suppliers, and customers, establish long-term and stable cooperative relationships, and jointly respond to the challenges brought by market changes. Fifth, turn to the domestic market and expand domestic market share by improving product quality and brand awareness.

In short, when facing the challenge of soaring shipping costs, Chinese glass product export companies need to actively adjust their strategies and respond flexibly to remain invincible in the complex and changing international market environment.