High tech production to stay in China
Currently manufacturing orders are below levels that could suggest any change in the macroeconomic environment. Governments have done their best to support businesses but until orders pick up it will be hard to move forward. BIMCO predicts that the Chinese New Year will be the turning point to see what the market in 2021 will look like. Whatever the result, changes began in 2018 when many firms started diversifying away from China.
Peter Sand, Senior Analyst at BIMCO, explains that for some like apparel this will be easier. More specialised ecosystem businesses however can’t leave the Chinese market with its well-built infrastructure.
“There is no way around China for high tech production,” Sand explains. BIMCO expects productions to spread to more locations predominantly to Japan and Korea for high-tech production and many more for goods where a cheap labour force is needed. But also, to the consumers’ markets in Europe and North America. In order to stay competitive on these more local markets firms will have to look at automation that could save costs.
Liner companies intended to use hub-and-spoke locations around the world to make use of the wide reaching abilities of good infrastructure and utilise ultra large container ships. Covid-19 is putting pressure on the plans as there are more manufacturing hubs being developed and it will be more difficult to fill up a ship at one or two places.
Read the full analysis HERE...