Chinese Lunar New Year is the single most important holiday in Chinese culture. The holiday lasts about two weeks in the big cities and can stretch for a month or more in the smaller towns like Liuyang, where workers take time off to avoid the cold and wet months of January and February. Many workers choose not to return to the factories again until the weather warms in mid-March. This year we also face the challenge of the Winter Olympics and a big government meeting in March. So factories are unlikely to get back to full production until mid-March.
SHIPPING: The global shipping crisis continues. It is particularly difficult for the fireworks industry as the large ocean liners have chosen to not carry Haz-Mat on many vessels. This has driven the industry to move towards Charters which are more expensive and offer less flexibility then the larger shipping lines. Continued Covid restrictions globally are the main reason for shipping bottlenecks as well as continued strong demand for goods. This has created a scarcity of shipping space and has driven shipping prices to record levels. The maritime consultancy Drewry estimated that the shipping industry made record combined profits of $190bn in 2021 and it’s likely that record will be broken in 2022.
Let’s review the important topics one by one:
1.) Port congestion – Port congestion in LA/LB have improved slightly in January but still remain a serious unresolved problem.
2.) Lack of shipping space – The major shipping lines such as Cosco, Maersk, etc. have dramatically cut back on Haz-mat bookings. Booking space in January was some of the worst we have seen in the last 12 months. Because of this Huayang has moved to expensive and very restrictive charter vessels.
3.) Charters – The charters are happening. However, the initial charters faced complications and were delayed for several weeks. They have now departed China, but it is unclear exactly when they will arrive in the USA. Future charters are planned but the exact load dates and booking information has not been provided yet.
INFLATION: General inflation will continue due to increasing shipping costs as well as raw material cost increases. However, the biggest new inflation threat for fireworks is being caused by a shift in Consumer Preference here in China. In the past, fireworks buyers in China preferred cakes. However, now the trend is moving towards smaller novelty items like smoke, roman candles, sparklers, spinners, etc. The China domestic market is massive. It is several times as large as the USA fireworks market. Therefore, demand for these “novelty items” could drive the price up significantly in 2022. Also, because of the large demand, domestic buyers are paying in advance to secure their orders. Just as with USA orders, it is now customary for Chinese New Year 2023 orders to be placed at least 1 year in advance. So this means these items may not be available in 2022 or might only be available at increased prices and advanced payments. Many of you will note on your status reports that these small items are “delayed” and might not get producted.
PRODUCTION: The factories are all closed. They will not re-open until Mid-March because of the Beijing Olympics and government meetings.
With the late re-opening of the factories and the continued delays in shipping, we recommend that you begin to contact us to review your order status and consider to replace any delayed production with stock. Then we can put your container into the queue awaiting a booking. Also keep in mind that customers who are current with payments will be given first priority for the limited shipping space.
CHINA NEWS: Covid restrictions have increased leading up to the Beijing Olympics. Travel restrictions and lockdowns have been happening all month. We are hoping Covid restrictions will begin to ease after the Olympics are finished.
Our Liuyang Team enjoyed a large Chinese New year party and are enjoying some rare time off. The whole team would like to wish you a happy and prosperous year of the Tiger!
Contact PyroBuy Fireworks at sales@pyrobuy.com