Rail Services: market situation between China and Europe

DACHSER update on the Russia-Ukraine conflict

DACHSER is following the news from Ukraine with great concern and dismay. We are deeply moved by the suffering that the war has brought to the people in the country and to all those who have had to flee their homeland in recent days. The fighting, mutual sanctions and airspace closures are also having a massive impact on supply chains and the supply of goods in the region.

Brexit: From January 31, 2020 with a transition period

Britain will leave the European Union on January 31, 2020. According to the current circumstances, nothing will change in goods traffic between the countries of the European Union and Great Britain until the end of this year.

After that, a free trade agreement between the EU countries and Great Britain should come into force. However, it is still unclear whether such a free trade agreement can be negotiated and approved by the end of the year.

The Brexit checklist (see below) therefore still provides an overview of the necessary preparatory measures. If you have any questions, please contact your responsible contact person at the respective DACHSER branch.

Chinese New Year: Impact on logistics

In 2021, Chinese New Year falls on February 12, it is the biggest festival in China where people celebrate the beginning of a new year with their families. The week-long national public holiday has consequences on global supply chains.

The following information provides an overview of some key facts of the festival and its possible impacts on logistics.

Dates and key facts

• February 12, 2021 marks the start of the Chinese New Year (the year of Ox).
• Chinese national holiday begins on February 11 and ends on February 17, meaning that most of the businesses, including DACHSER branches in China, will be closed and resumes on February 18.
• Factories and manufacturing sites used to be closed for a longer period of time. Production might pause already one week before Chinese New Year, some factories will only resume one month after.
• The long holiday allows workers in the city to travel back to their hometown for a family reunion, though it might not be the case this year due to the pandemic.

Impact on supply chain

• Extensive holidays in China can lead to delays to your shipments for up to one month.
• Due to the abovementioned closing period of manufacturing industries, there will be no productions from China for at least a week. Even though factories will be restarting gradually, operations will not resume to full swing immediately.
• Productions from other countries in Asia will also be impacted as some parts might come from China or the assembling processes are done there.
• Most shippers will stock up inventories that are sufficient to cover the Chinese New Year period, this leads to a pre-holiday cargo rush; it will also take some time after the festival to normalize the market conditions.

Get prepared

To avoid unnecessary price hikes and delays, it is strongly recommended to place bookings well in advance. At DACHSER, our logistics experts can help you to plan together. Feel free to discuss with us about your needs and we can work out the best to maintain your supply chain uninterrupted throughout the Chinese New Year.

APAC countries signed world's largest free trade agreement

On November 15, 2020, leaders from 15 Asia Pacific nations came to an agreement to form a free trade bloc under the Regional Comprehensive Economic Partnership (RCEP). The agreement is intended to facilitate trades among the member countries by removing tariffs and stimulate the economy amid the COVID-19 pandemic.

Main points at a glance:

• RCEP is a free trade agreement in the Asia-Pacific region.
• Fifteen countries signed the agreement including Australia, Brunei, Cambodia, China,  Indonesia, Japan, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, South Korea, Thailand, and Vietnam.
• With the participation of the 15 countries, they have formed the world's largest free trade zone, covering about 30% of the world's population and nearly 30% of global GDP.
• China’s presence notably increases the impact of the agreement and boosts the total GDP of the RCEP member countries.
• India did not join the partnership over concerns that cheap import products might pose a harm to local producers.
• The new free trade zone is bigger than the US-Mexico-Canada Agreement (USMCA) and the European Union.
• The RCEP will reduce taxes on most goods over a 20-year period, streamline customs procedures, regulates the field of intellectual property and digital trade and replace a number of bilateral trade agreements in the region with one set of rules.
• Some benefits are expected to be seen in 2021 once participate nations complete their domestic ratification procedures.

What does it mean to the global supply chain?

• The RCEP is expected to eliminate a range of tariffs and quotas on most of the goods traded within the region over a 20-year period.
• The "rules of origin” may have the biggest impact. Under RCEP, parts from any member nation would be treated equally, this gives companies in RCEP member countries an incentive to look for supplier within the region.
• Many of the RCEP member countries already have bilateral free trade agreements between each other, RCEP would streamline the various overlapping preferential terms. This reduces complexity and reduce costs for businesses.
• China, Japan and South Korea are the traditional key players for electronics, automotive, textiles and garments industries, having them in the RCEP would ensure supply chain stability to ASEAN countries.
• It gives an incentive for companies to look for supplier within the RCEP member countries, thereby laying the foundation for enabling an accelerated GDP growth within the region.

As RCEP will further fuel the ongoing manufacturing shifts within Asia, it not only affects companies within the member countries but is also relevant to any companies worldwide who have business in the region.

Feel free to reach out to us at dachser.apac-asl@dachser.com to know more about the new free trade agreement. Together we can review your current supply chain locations and identify steps to grasp the greatest benefits under the impact of RCEP.