“It’s a huge change in a positive way as it should improve industrial output in Asia and global supply,” said Trinh Nguyen, senior economist at Natixis in Hong Kong. Still, she cautions that many countries continue to grapple with other problems, like shortages of workers.
“There are certain aspects of supply-chain shocks that are easing, but the shortage issue isn’t going to completely disappear,” she said.
In Vietnam, factory owners in the country’s southern manufacturing hub said production is far smoother than it was several months ago, but challenges remain, including high shipping costs and labor shortages, as many workers that had returned to their villages during the Covid-19 wave have yet to return.
Do Xuan Lap, the head of Vietnam’s Timber and Forest Products Association, said that the situation is improving and that medium-size furniture factories, with around 200 to 500 workers, are operating at around 80% capacity. But larger furniture makers, with up to 3,000 workers, were missing more laborers and operating at around 65% capacity.
In China, a power crunch that hit the country’s manufacturing hubs earlier this fall has eased in recent weeks after authorities allowed coal-fired power plants to charge higher prices. Previously, some plants were curbing power output. Oil prices, too, have pulled back after hitting their highest level since the 2014 energy bust.
Manufacturing production has largely resumed at normal capacity since October, according to interviews with several factory owners based in China’s southern manufacturing hub of Guangdong.
Shortages of shipping containers also appear to be easing.
Thomas Broertjes, managing director of Foshan Oufeng Furniture Co. based in Guangdong province, said that in September, he wasn’t able to ship any products because he was unable to secure space on even a single shipping container that month. “That was really the lowest point,” he said.
While the company has been able to book more containers since October, it still takes days until it can confirm bookings with vendors. Prices remain three or four times what he paid before 2020. “I’m hopeful that things are getting better. It couldn’t get worse,” he said, though he added, “it’s still a big hassle.”
Other factory owners say they are still struggling to deal with bottlenecks. Since this June, boxes filled with auto parts began to pile up at the warehouse of Zhejiang Songtian Automotive Motor System Co. as more importers from the West held off on taking delivery amid soaring freight rates. The company recently repurposed sections of a new factory to store products.
“The entire factory is now filled with finished goods that couldn’t be shipped out. This is our biggest headache at the moment, and there’s nothing we can do about it,” said Dai Xuezhi, chief executive of the company based in the southeastern Chinese city of Wenzhou.
Data provider eeSea says containership delays fell in October from September, but there hasn’t been much change when it comes to the vessels waiting outside of ports in November. As of Friday morning, there were 500 large container ships waiting to dock outside ports in Asia, Europe and North America, up slightly from the 497 vessels that waited on Oct. 8.
In the U.S., the destination for many of the goods made in Asian factories, there are few signs that the gridlock is easing.
Freight railroads recently lifted their limits on inbound cargo into congested container terminals in the Chicago area. But boxes are still swamping the ports of Los Angeles and Long Beach, and shipping executives note the backlog of vessels offshore suggests the flow of inbound shipments isn’t letting up.
“We are still in the thick of it,” said Alan McCorkle, chief executive of Yusen Terminals LLC, at the Port of Los Angeles.