US Manufacturing Orders for Chinese Factories Drop 40%... Will Year-End Demand Disappear Amid Consumer Slump?

Container Cargo Volume Also Down 21% from August to November
Export Companies in Recession Amid China Lockdowns and US Consumption Slump

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] Manufacturing orders from American companies to Chinese manufacturers have decreased by more than 40%, and container cargo volume from China to the United States has also dropped by over 20% since August. As global inflation intensifies and consumer downturn spreads, Chinese manufacturers are taking a direct hit, raising concerns about a potential economic recession early next year.

On the 4th (local time), CNBC reported based on its Supply Chain Heat Map data that last month, manufacturing orders from the U.S. originating in China fell by 40% compared to the previous year. CNBC analyzed that this was due to production disruptions caused by prolonged COVID-19 lockdowns in China, coupled with protests against these measures, leading to a series of order cancellations, and because U.S. product inventories have not decreased since September.

Container volume from China to the U.S. has also declined. According to data from supply chain research firm project44, container cargo volume from China to the U.S. from August to November this year dropped from 2,475,792 TEU (1 TEU equals one 20-foot container) to 1,961,121 TEU, a decrease of more than 21%.

The impact of the U.S. consumer downturn is affecting not only China but also the Vietnamese economy, which is gaining attention as an alternative supply chain location for the U.S. and Europe. According to the Vietnam General Statistics Office, the number of businesses closing each month in Vietnam since the beginning of this year reached 12,500, a 24.8% increase compared to the previous year. CNBC analyzed that this is due to simultaneous declines in exports to the U.S. and the European Union (EU), causing a recession among export companies.

Ports on the U.S. West Coast are also suffering significant damage. According to global shipping company HLS, the average transportation cost for carriers at U.S. West Coast ports centered around Los Angeles (LA) is $1,300 to $1,400 per 40-foot container (FEU), which is significantly lower than the East Coast transportation cost of $3,200 to $3,300.