This week, we have two pieces of news for you: one good news and one bad news.

The good news is that, unlikely the trend over the past months where seafreight rates rose to record high, this month the shipping costs havedecreased about 40% from the peak.

And the bad news is that, many manufacturers in China had to shut downseveral days a week because of power rationing, which started a week ago.

Differently from the usual reason of power shortages in Summer, this time, itwas the local governments that took the initiative to ration the power supply.

Why are they doing this? There are 2 main reasons:

  1. To fulfill the requirements of the central government’s plan to reduce carbon emissions and energy consumption.
  2. Power plants have suspended some power generation due to the price hikes of coal and gas as well as the comparatively low electricity price in China, which is settled by the government.

Will this situation continue? According to the “2021-2022 Autumn andWinter Action Plan for Air Pollution Management” issued by the Chinesegovernment this month, between October 2021 and March 2022, the power supplyand the production capacity in some industries may be further restricted.

To mitigate the impacts of these restrictions, V-Trust has 3 suggestionsto you.

  1. Place orders with your suppliers as early as possible and be prepared for longer lead time.
  2. Cooperate with manufacturers that are equipped with power generators.
  3. Arrange product inspection before shipment as factories may rush some orders to be ready within limited working days, resulting in more quality problems.

For more information about supply chain management or quality control servicesin Asia, please feel free to contact me at [email protected] anytime.

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