Skyrocketing transportation costs prevent Shanghai auto industry players from returning to work

(Yicai Global) May 17 – A sharp rise in logistics costs poses a big challenge for Shanghai auto industry players trying to get back to work as the city’s lockdown, which began last month, is eased as the Covid-19 outbreak comes under control.

Compared to April, when neither raw materials nor finished goods could be delivered, logistics bottlenecks eased considerably this month, but costs at least doubled, Yicai Global told a part of an auto parts company.

Previously, it cost around CNY 6,000 (USD 883) to send a 9.6-meter-long truck from Shanghai to eastern Shandong province, but now it costs up to CNY 13,000 (USD 1,915). ), said another auto component supplier.

Car shipping costs have also skyrocketed. It used to cost 1.30 CNY (0.20 USD) per kilometer, but now the prices are around 2.80 CNY (0.41 USD) per kilometer and in some cases up to 3 CNY, said a employee of a car manufacturer.

The price increases are because the cost of quarantining drivers and parking trucks at the other end is built in. There are also other additional costs such as damage to the vehicle and its goods while it is parked.

Auto logistics companies are unwilling to accept orders in the current situation, especially when it comes to transporting expensive luxury vehicles, as the potential losses are much higher, the person said.

“Manufacturers negotiate with dealers to share the additional delivery costs. But many dealers are unwilling to bear such additional costs because they are also under great pressure. However, if the dealers do not agree, the manufacturers will not ship cars at this time,” the employee added.

Auto parts suppliers are also in talks with their automaker customers to share costs. “Large customers can use their own trucks to collect the products. And at the same time they will collect orders from other manufacturers in their region. But those without such resources cannot organize their own pick-ups,” he added.

“We are now back at 50% capacity, and once the lockdown eases further, we expect to rebound to 70% by the end of the month,” the executive said. “However, we hope the government will reduce our tax and social charges a bit because we are really struggling to function,” he added.

Publishers: Tang Shihua, Kim Taylor