SHOGUN FIREWORKS BLOG
Monday, June 23, 2008
Shanghai port closes earlier from 1st July to 31st August 2008 for fireworks shipments
Over the weekend, we received confirmation that Shanghai port will stop accepting fireworks shipments from 1st July to 31st August. This will have an immediate effect on all fireworks shipments planned from Shanghai. This announcement came at very short notice as previously, we were all informed that Shanghai port would close from July 20th to August 31st.
Wednesday, June 18, 2008
Oil Shocker
We thought this was an interesting article about the rising cost of transport. Current freight rates for a 40' fireworks container to European Mainports are now nearing US$10,000
Stung by Soaring Transport Costs,
Factories Bring Jobs Home Again
Wall Street Journal
http://online.wsj.com/article/SB121331934552070357.html?mod=googlenews_wsj
By TIMOTHY AEPPEL
June 13, 2008; Page A1
The rising cost of shipping everything from industrial-pump parts to lawn-mower batteries to living-room sofas is forcing some manufacturers to bring production back to North America and freeze plans to send even more work overseas.
"My cost of getting a shipping container here from China just keeps going up -- and I don't see any end in sight," says Claude Hayes, president of the retail heating division at DESA LLC. He says that cost has jumped about 15%, to about $5,300, since January and is set to increase again next month to $5,600.
HOMEWARD BOUND
• The News: Soaring fuel prices are prompting some U.S. companies to bring overseas production back closer to home.
• The Background: Higher oil prices are part of a larger wave of inflation hitting manufacturers in low-cost countries as wages rise and regulations tighten.
• What's Next: Don't look for U.S. factory jobs to soar, but the bleeding could slow. Mexico may be the biggest beneficiary.The privately held company, known for making the heaters that warm football players on the sidelines, recently moved most of its production back to Bowling Green, Ky., from China. Mr. Hayes says the company was lucky to have held onto its manufacturing machinery. "What looked like an albatross a year and a half ago," he says, "today looks like a pretty good asset."
The movement of factories to low-cost countries further and further away has been a bittersweet three-decade-long story for the U.S. economy, knocking workers out of good-paying manufacturing jobs even as it drove down the price of goods for consumers. But, after exploding over the past 10 years, that march has been slowing.
The cost of shipping a standard, 40-foot container from Asia to the East Coast has already tripled since 2000 and will double again as oil prices head toward $200 a barrel, says Jeff Rubin, chief economist at CIBC World Markets in Toronto. He estimates transportation costs are now the equivalent of a 9% tariff on goods coming into U.S. ports, compared with the equivalent of only 3% when oil was selling for $20a barrel in 2000.
"In a world of triple-digit oil prices, distance costs money," Mr. Rubin wrote in a recent report. He figures that for every 10% increase in the distance of a trip, energy costs rise 4.5%.
Transportation costs are just part of a larger wave of inflation sweeping global manufacturing, which has also been pounded by higher costs for basic materials, such as steel and resins.
The cost of doing business in China in particular has grown steadily as workers there demand higher wages and the government enforces tougher environmental and other controls. China's currency has also appreciated against the dollar -- though not as much as some critics contend it should -- increasing the cost of its products in the U.S.
Edward Zaninelli, vice president of trans-Pacific westbound trade at Orient Overseas Container Lines in San Ramon, Calif., a major shipping line, says he's heard from customers who are moving production back to the U.S., including a maker of steel pans for car engines.
"I believe a decent amount of production could come back into the States within five years, not everything," he says. "But it won't be because of transport costs -- it'll be because other production costs have gone up and companies have realized they can have better control over their production when it's closer to home."
For many manufacturers, though, oil prices that have hurtled past $130 a barrel have been the tipping point.
Emerson, the St. Louis-based maker of electrical equipment, recently shifted some production of items such as appliance motors from Asia to Mexico and the U.S., in part to offset rising transportation costs by being closer to customers in North America.
Edward Monser, the company's chief operating officer, says logistics costs, which include all the expenses associated with moving goods, became a worry about a year ago.
"That's when it became a dominant part of the discussion," he says, adding that oil then was less than $100 a barrel. "So with oil now at $130, it's even more serious." Mr. Monser says Emerson's larger strategy is to regionalize manufacturing, producing as much as possible within the part of the world where its sold.
But moving production closer to markets won't avoid all the problems associated with rising transportation costs. Manufacturers face hefty surcharges on domestic shipments by truck and train. And already congested domestic transportation systems may have difficulty handling a sudden upswing in demand from manufacturers buying and moving more raw materials and other supplies over U.S. rails and highways.
Moreover, in certain industries the advantages derived from offshore production continue to trump higher transportation costs.
Electronics firms, for instance, are now clustered in Asia and gain a major benefit of proximity to one another.
While many manufacturers are re-evaluating production strategies, there are limits to how many jobs will flow back to the U.S. One problem is that much of the basic infrastructure needed to support many industries -- such as suppliers who specialize in producing parts or repairing machines -- has dwindled or disappeared.
U.S. job losses in manufacturing have averaged 41,000 a month so far this year -- nearly double the pace last year, with sectors such as autos and construction materials tied to the housing slump especially hard hit. In essence, every job added as a result of companies pulling work back home is being more than offset by others reeling from the domestic slump.
Higher fuel costs "may slow the outsourcing of goods in the future, rather than causing a massive shift back of those things that have already been outsourced," says Daniel Meckstroth, an economist at the Manufacturers Alliance/MAPI, a public policy group in Arlington, Va.
A prime example is Craftmaster Furniture in Taylorsville, N.C. The company, bought two years ago by a Chinese manufacturer, once intended to shift 40% of its U.S. production to China by the end of this year or early next year. With the planned move only about half done, that exodus has stopped cold.
"We're getting hit with increases up and down the system," says Roy Kalcain, the company's president. "It's changing our whole equation for where we produce." As recently as a year ago, Mr. Kalcain says he was saving 15% when he assembled sofas in North Carolina using kits of fabric that were pre-cut in China. Those savings are now only 7% or 8%.
When savings fall to far less than 15%, it gets harder to justify having the work done in distant Chinese factories that take 12 weeks to deliver products.
The higher costs are particularly problematic for lower-value goods: The cheaper a product, the more significant transportation costs are in the final price. That may help explain why Chinese exports of such "freight-sensitive" goods to the U.S. are now falling for the first time in more than a decade, according to CIBC's Mr. Rubin.
Bremen Castings Inc., a family-owned foundry in Bremen, Ind., is seeing a wave of customers bringing work back from China and other low-cost countries.
Last month, a pump manufacturer, which had moved more than $1 million worth of metal-casting work from Bremen to China two years ago, called "to reactivate everything," says J.B. Brown, the foundry's president. "They told me the cost of transport from overseas was the straw that broke the camel's back -- and they said they didn't see it going back down any time soon."
And the heavier and bulkier goods are, the more sensitive they are to fuel costs. CIBC's Mr. Rubin predicts Mexico will be "the biggest winner of all" as increased transportation costs make China uncompetitive in an ever-growing list of businesses in North America. Even Mexico may be too far for some companies.
Last fall, Crown Battery Manufacturing Co. decided to close a plant it bought in Reynosa, Mexico, and move the jobs to its Ohio home base, adding 25 workers to the 400 it already employed.
"We're shipping batteries, which are big and heavy," says Hal Hawk, the company's chief executive.
Mr. Hawk estimates shipping to customers, who tend to be clustered in the Midwest, was adding 5% to 10% to the cost of the Mexican-made batteries, which he says also suffered from quality-control problems. The smallest batteries are 20-pounders for lawnmowers, but they also make 29,000-pound giants for running underground mining machines in places like southern Illinois.
"They were traveling 2,000 miles to get to those major customers," says Mr. Hawk, and all indications are that fuel surcharges on the trucks would just keep growing.
-- Conor Dougherty
Stung by Soaring Transport Costs,
Factories Bring Jobs Home Again
Wall Street Journal
http://online.wsj.com/article/SB121331934552070357.html?mod=googlenews_wsj
By TIMOTHY AEPPEL
June 13, 2008; Page A1
The rising cost of shipping everything from industrial-pump parts to lawn-mower batteries to living-room sofas is forcing some manufacturers to bring production back to North America and freeze plans to send even more work overseas.
"My cost of getting a shipping container here from China just keeps going up -- and I don't see any end in sight," says Claude Hayes, president of the retail heating division at DESA LLC. He says that cost has jumped about 15%, to about $5,300, since January and is set to increase again next month to $5,600.
HOMEWARD BOUND
• The News: Soaring fuel prices are prompting some U.S. companies to bring overseas production back closer to home.
• The Background: Higher oil prices are part of a larger wave of inflation hitting manufacturers in low-cost countries as wages rise and regulations tighten.
• What's Next: Don't look for U.S. factory jobs to soar, but the bleeding could slow. Mexico may be the biggest beneficiary.The privately held company, known for making the heaters that warm football players on the sidelines, recently moved most of its production back to Bowling Green, Ky., from China. Mr. Hayes says the company was lucky to have held onto its manufacturing machinery. "What looked like an albatross a year and a half ago," he says, "today looks like a pretty good asset."
The movement of factories to low-cost countries further and further away has been a bittersweet three-decade-long story for the U.S. economy, knocking workers out of good-paying manufacturing jobs even as it drove down the price of goods for consumers. But, after exploding over the past 10 years, that march has been slowing.
The cost of shipping a standard, 40-foot container from Asia to the East Coast has already tripled since 2000 and will double again as oil prices head toward $200 a barrel, says Jeff Rubin, chief economist at CIBC World Markets in Toronto. He estimates transportation costs are now the equivalent of a 9% tariff on goods coming into U.S. ports, compared with the equivalent of only 3% when oil was selling for $20a barrel in 2000.
"In a world of triple-digit oil prices, distance costs money," Mr. Rubin wrote in a recent report. He figures that for every 10% increase in the distance of a trip, energy costs rise 4.5%.
Transportation costs are just part of a larger wave of inflation sweeping global manufacturing, which has also been pounded by higher costs for basic materials, such as steel and resins.
The cost of doing business in China in particular has grown steadily as workers there demand higher wages and the government enforces tougher environmental and other controls. China's currency has also appreciated against the dollar -- though not as much as some critics contend it should -- increasing the cost of its products in the U.S.
Edward Zaninelli, vice president of trans-Pacific westbound trade at Orient Overseas Container Lines in San Ramon, Calif., a major shipping line, says he's heard from customers who are moving production back to the U.S., including a maker of steel pans for car engines.
"I believe a decent amount of production could come back into the States within five years, not everything," he says. "But it won't be because of transport costs -- it'll be because other production costs have gone up and companies have realized they can have better control over their production when it's closer to home."
For many manufacturers, though, oil prices that have hurtled past $130 a barrel have been the tipping point.
Emerson, the St. Louis-based maker of electrical equipment, recently shifted some production of items such as appliance motors from Asia to Mexico and the U.S., in part to offset rising transportation costs by being closer to customers in North America.
Edward Monser, the company's chief operating officer, says logistics costs, which include all the expenses associated with moving goods, became a worry about a year ago.
"That's when it became a dominant part of the discussion," he says, adding that oil then was less than $100 a barrel. "So with oil now at $130, it's even more serious." Mr. Monser says Emerson's larger strategy is to regionalize manufacturing, producing as much as possible within the part of the world where its sold.
But moving production closer to markets won't avoid all the problems associated with rising transportation costs. Manufacturers face hefty surcharges on domestic shipments by truck and train. And already congested domestic transportation systems may have difficulty handling a sudden upswing in demand from manufacturers buying and moving more raw materials and other supplies over U.S. rails and highways.
Moreover, in certain industries the advantages derived from offshore production continue to trump higher transportation costs.
Electronics firms, for instance, are now clustered in Asia and gain a major benefit of proximity to one another.
While many manufacturers are re-evaluating production strategies, there are limits to how many jobs will flow back to the U.S. One problem is that much of the basic infrastructure needed to support many industries -- such as suppliers who specialize in producing parts or repairing machines -- has dwindled or disappeared.
U.S. job losses in manufacturing have averaged 41,000 a month so far this year -- nearly double the pace last year, with sectors such as autos and construction materials tied to the housing slump especially hard hit. In essence, every job added as a result of companies pulling work back home is being more than offset by others reeling from the domestic slump.
Higher fuel costs "may slow the outsourcing of goods in the future, rather than causing a massive shift back of those things that have already been outsourced," says Daniel Meckstroth, an economist at the Manufacturers Alliance/MAPI, a public policy group in Arlington, Va.
A prime example is Craftmaster Furniture in Taylorsville, N.C. The company, bought two years ago by a Chinese manufacturer, once intended to shift 40% of its U.S. production to China by the end of this year or early next year. With the planned move only about half done, that exodus has stopped cold.
"We're getting hit with increases up and down the system," says Roy Kalcain, the company's president. "It's changing our whole equation for where we produce." As recently as a year ago, Mr. Kalcain says he was saving 15% when he assembled sofas in North Carolina using kits of fabric that were pre-cut in China. Those savings are now only 7% or 8%.
When savings fall to far less than 15%, it gets harder to justify having the work done in distant Chinese factories that take 12 weeks to deliver products.
The higher costs are particularly problematic for lower-value goods: The cheaper a product, the more significant transportation costs are in the final price. That may help explain why Chinese exports of such "freight-sensitive" goods to the U.S. are now falling for the first time in more than a decade, according to CIBC's Mr. Rubin.
Bremen Castings Inc., a family-owned foundry in Bremen, Ind., is seeing a wave of customers bringing work back from China and other low-cost countries.
Last month, a pump manufacturer, which had moved more than $1 million worth of metal-casting work from Bremen to China two years ago, called "to reactivate everything," says J.B. Brown, the foundry's president. "They told me the cost of transport from overseas was the straw that broke the camel's back -- and they said they didn't see it going back down any time soon."
And the heavier and bulkier goods are, the more sensitive they are to fuel costs. CIBC's Mr. Rubin predicts Mexico will be "the biggest winner of all" as increased transportation costs make China uncompetitive in an ever-growing list of businesses in North America. Even Mexico may be too far for some companies.
Last fall, Crown Battery Manufacturing Co. decided to close a plant it bought in Reynosa, Mexico, and move the jobs to its Ohio home base, adding 25 workers to the 400 it already employed.
"We're shipping batteries, which are big and heavy," says Hal Hawk, the company's chief executive.
Mr. Hawk estimates shipping to customers, who tend to be clustered in the Midwest, was adding 5% to 10% to the cost of the Mexican-made batteries, which he says also suffered from quality-control problems. The smallest batteries are 20-pounders for lawnmowers, but they also make 29,000-pound giants for running underground mining machines in places like southern Illinois.
"They were traveling 2,000 miles to get to those major customers," says Mr. Hawk, and all indications are that fuel surcharges on the trucks would just keep growing.
-- Conor Dougherty
Tuesday, June 3, 2008
Cable release from the Ministry of Communication (MOC) 交通部 - 交水明电（2008）0611号
Since the two fireworks explosion early of the year, some of the ports have withdrawn from the business of transportation of fireworks. As a result, export of fireworks was limited and caused a backlog of cargo. Not only does it affect the normal fireworks production and non fulfillment of export contracts, it also create a safety issue. Even though the port of Beihai and Shanghai have worked hard to expand their capacity, there are still over 5,000 containers being held up at place of production waiting to be transported. The fireworks manufacturers and their local government representatives and the importers have requested in person, and by letters to improve the channel of shipping fireworks.
In order to lessen the tension of exportation of fireworks and the stock pileup, to maintain our image of export country, and to support the economic growth of the fireworks production area, the Ministry of Communication (MOC) has fully studied the issue and with the approval of “Ministry of Supervisor Board in Safety Production” (国家安全生产监督管理总局) hereby given a notice of emergency expand the fireworks export channel is given to the department concern for their study and implementation.
1. “Ordinance of safety transportation of fireworks” has set forth all the rules and regulations regarding the transportation of fireworks over water. Simply losing down the transportation channel is not the right way to solve the problem. Instead it might create greater safety issue due to increasing false decoration. All transportation and port authorities in all levels should fully study the ordinance and make use of it rules to strongly govern the safety issue, and to steamline the transportation of fireworks in the safest manner.
2. Presently, the shipping season for USA is approaching the end very soon (high shipping season for USA is March to early June, and for Europe is August and September). We ask that the port of Beihai and Shanghai, upon fulfillment of all safety regulations, to arrange the shipment to USA with priority.
3. As an emergency measure, we ask that the port authority of Ningbo, Shenzhen and Guangzhou to study with the industry that manage the container terminal, the possibility of opening the Ningbo Port, the Yintian Port (of Shenzhen), and the NanSha Port (of Guangzhou) in near future as an emergency exit of fireworks. Please report the process of such suggestion to the department.
4. In order to strengthen from the production source to ensure the safety in transportation, we ask that the concerning governing department, the export and transportation industries from all production areas to do their best to use the shortest route in transportation and to minimize the transshipment process. The Port authority and the port facility should take initiative to contact with the governing department in the fireworks area, the industries of fireworks production, trading and logistic, together with the Customs, CIQ and Marine Department; to further study the possibility of loading into containers, custom clearing, CIQ supervision and sealing of containers a the place of production.
5. Port authority needs to strengthen their knowledge of the important aspects such as the container loading, custom clearance, transportation, warehousing of fireworks. Also to inspect and supervise the relating industries to follow the rules and procedure while working in stacking, separation, inspection and transportation to vessel, of all loaded containers. More frequent inspection to the containers declared as general merchandise to eliminate the possibility of false declaration in order to smuggle fireworks with general merchandise, and to heavily penalize such active. Container yard should operate the fireworks loaded containers following the regulations as published by the transportation standard under “safety operation of containers with dangerous goods” (JT397-2007).
6. Transportation of fireworks over water is cost effective and safer, and such advantage should be fully utilized. We encourage the transportation and related departments in Hunan and Jiangxi to quickly study the opening of river ports in cities of Changsha, Zhuzhou, Xiangtan and Nanchang, nearby the production area, to start the industry of shipping fireworks. The port authority of Shanghai, Zhejiang and Jiangsu should cooperate and upgrade their facility to prepare for a better operation of transshipment of fireworks.
Marine Department of the Ministry of Communication, safety transportation department is liaison office of this notice. Contact person: Chen, Zheng Cai, 陳正才 Tel. 010-65292225, fax. 010-65292638, e-mail. chenzhengcai@moc.gov.cn
Dated: May 30th, 2008.
In order to lessen the tension of exportation of fireworks and the stock pileup, to maintain our image of export country, and to support the economic growth of the fireworks production area, the Ministry of Communication (MOC) has fully studied the issue and with the approval of “Ministry of Supervisor Board in Safety Production” (国家安全生产监督管理总局) hereby given a notice of emergency expand the fireworks export channel is given to the department concern for their study and implementation.
1. “Ordinance of safety transportation of fireworks” has set forth all the rules and regulations regarding the transportation of fireworks over water. Simply losing down the transportation channel is not the right way to solve the problem. Instead it might create greater safety issue due to increasing false decoration. All transportation and port authorities in all levels should fully study the ordinance and make use of it rules to strongly govern the safety issue, and to steamline the transportation of fireworks in the safest manner.
2. Presently, the shipping season for USA is approaching the end very soon (high shipping season for USA is March to early June, and for Europe is August and September). We ask that the port of Beihai and Shanghai, upon fulfillment of all safety regulations, to arrange the shipment to USA with priority.
3. As an emergency measure, we ask that the port authority of Ningbo, Shenzhen and Guangzhou to study with the industry that manage the container terminal, the possibility of opening the Ningbo Port, the Yintian Port (of Shenzhen), and the NanSha Port (of Guangzhou) in near future as an emergency exit of fireworks. Please report the process of such suggestion to the department.
4. In order to strengthen from the production source to ensure the safety in transportation, we ask that the concerning governing department, the export and transportation industries from all production areas to do their best to use the shortest route in transportation and to minimize the transshipment process. The Port authority and the port facility should take initiative to contact with the governing department in the fireworks area, the industries of fireworks production, trading and logistic, together with the Customs, CIQ and Marine Department; to further study the possibility of loading into containers, custom clearing, CIQ supervision and sealing of containers a the place of production.
5. Port authority needs to strengthen their knowledge of the important aspects such as the container loading, custom clearance, transportation, warehousing of fireworks. Also to inspect and supervise the relating industries to follow the rules and procedure while working in stacking, separation, inspection and transportation to vessel, of all loaded containers. More frequent inspection to the containers declared as general merchandise to eliminate the possibility of false declaration in order to smuggle fireworks with general merchandise, and to heavily penalize such active. Container yard should operate the fireworks loaded containers following the regulations as published by the transportation standard under “safety operation of containers with dangerous goods” (JT397-2007).
6. Transportation of fireworks over water is cost effective and safer, and such advantage should be fully utilized. We encourage the transportation and related departments in Hunan and Jiangxi to quickly study the opening of river ports in cities of Changsha, Zhuzhou, Xiangtan and Nanchang, nearby the production area, to start the industry of shipping fireworks. The port authority of Shanghai, Zhejiang and Jiangsu should cooperate and upgrade their facility to prepare for a better operation of transshipment of fireworks.
Marine Department of the Ministry of Communication, safety transportation department is liaison office of this notice. Contact person: Chen, Zheng Cai, 陳正才 Tel. 010-65292225, fax. 010-65292638, e-mail. chenzhengcai@moc.gov.cn
Dated: May 30th, 2008.
Monday, May 19, 2008
This July 4, Fewer Bombs May Burst in Air
By KATE MURPHY
Published: May 17, 2008
An explosion that destroyed 20 fireworks warehouses in China three months ago will probably mean dimmer night skies on the Fourth of July in the United States.
http://www.nytimes.com/2008/05/17/business/worldbusiness/17kaboom.html?ex=1368763200&en=d92c238cdb66b4bc&ei=5124&partner=permalink&exprod=permalink
Published: May 17, 2008
An explosion that destroyed 20 fireworks warehouses in China three months ago will probably mean dimmer night skies on the Fourth of July in the United States.
http://www.nytimes.com/2008/05/17/business/worldbusiness/17kaboom.html?ex=1368763200&en=d92c238cdb66b4bc&ei=5124&partner=permalink&exprod=permalink
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