29 Nov 2019

Why the US-China Trade War is Actually an Opportunity for Shipkoo

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The ongoing trade wars between China and the United States has begun affecting the economies of all the involved countries that have business relationship. The shipping and logistics industry are among the core avenues where the greatest impacts are felt. In 2019, there has been a drop in imports and exports by nearly 6.5% in China and 10% in USA respectively.

The emerging issues in trade war between China and USA is likely to continue in the coming years, hence causing a potentially reshaping of the logistics and shipping industry. For example, U.S importers have begun switching their production from China to other countries such as Malaysia, Vietnam, India, and the Middle East. This trend my not only exist for some years, but it will also accelerate in the coming years. What does this tell you? Basically, this means that China has to establish its own mechanisms that can sustain logistics operations. Besides, this implies that there would be a really huge imbalance between supply and demand of the logistics services due to the delinked services that were initially provided by the U.S logistic companies.

This is the point where Shipkoo comes in to play to salvage the dire situation that’s crawling in. Shipkoo basically provides logistic services that is established through proprietary technology as well as service culture that is driven by deep understanding on different challenges in this industry.

Diversification of import sources

Besides, since there will be much diversification of import sources, Shipkoo will be advantageous handling importers who will be in the shifting course either in processing or manufacturing. For instance, there has already been repeat cases of such instances where the U.S importers have begun switching their production operations from China to other countries. Consequently, this has translated to small orders with increased number of shipments to more locations. Moreover, Section 321 of the Tariff Act allows merchandise shipments below US$800 to enter the US without paying duties. Shipkoo helps customer to claim that exemption when it sends parcel shipments from their supplier. Therefore, with expertise on handling small orders, this provides the opportunity Shipkoo to become more competitive.

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Increased Consolidation in The Logistics Industry

Some of the greatest objectives of Shipkoo is lower inventory risk, responsiveness to customer demands and lower costs of pick and pack. Trade wars between China and the United States has resulted to anincrease in consolidation in the logistic industry. Picking and packaging each parcel is a labor cost, and wages are much cheaper at warehouses in Asia than in the US. The cost of renting spaces in the US is higher too. Therefore, instead of contracting many companies for storage, cartage, shipping, and ground transport, companies such as Shipkoo take over such responsibilities to reduce risk and improve oversight through origin fulfillment. Instead of shipping goods to the US, Shipkoo fulfills each order directly from China or other countries in Asia. Consolidation has been seen to increase, and it is expected to peak in the year 2020 and onwards.

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