China’s freight shipping has increased seven to eight times, which leads to higher prices throughout the supply chain
“The cost of containerized shipping has increased seven to eight times compared to pre-pandemic prices. If for a 40-foot container from China to Constanța, the transport cost was 1,800-2,500 dollars (USD), today this cost is 14,000-16,000 dollars, at the same volume of goods transported. We looked for solutions and streamlined certain processes so that the price per cubic meter would increase much less by a percentage,” says Marius Grada, co-founder and CEO of ROMASIA.
More specifically, before the health crisis, the company sold one cubic meter of transported goods at a price of 120-160 dollars, and now the transport is done with 400 dollars per cubic meter, which, in percentages, is below the increase of the market price. ROMASIA’s transport capacity, whose main activity is purchasing on the Chinese market, means almost 20,000 cubic meters of goods transported for a base of about 400 customers.
In addition to the challenges, there is the greater effort that the company has made to maintain its customers, being forced to reduce profit margins. For example, for some customers, either importing from China was no longer feasible, or in the case of those who did not give up, selling prices were drastically changed.
Marius Grada gives the concrete example of an importer of outdoor furniture whose average value of goods transported on a container, before the crisis, was 15,000-18,000 dollars, in which case he paid 2,000 dollars for transport.
“In the new context, he pays $16,000 for goods and $15,000 for transportation. Therefore, the cost impact is, together with the other costs – customs duties, handling, etc. – over 100%. This means that he will at least have to double the price of the product to the customer. For other types of products, such as small in volume, the change was not so dramatic,” explains Marius Grada. He also says that it is difficult to make a long-term forecast for the evolution of prices in maritime transport because it all depends on how the pandemic evolves and the political decisions that will be taken worldwide.
ROMASIA is currently focusing on two main business directions and a few complementary ones. First, there is a line for procurement, when the customer refers to the company as its own procurement department in China, in the sense that ROMANIA deals with the whole process, from finding suppliers and production, to delivering the goods to the warehouse the customer. A second main line is what Marius Grada calls “turnkey grouping”, addressed especially to small and medium customers, online stores or other similar businesses. More precisely, the customer looks for his goods in China and then sends to ROMASIA the proforma invoice received from the Chinese company.
“We are a niche business by the fact that we take the goods from the client from China and deliver them customs cleared and with the invoice for Romania to the destination. Among our services, we can list: making purchases, checking suppliers and goods, consolidating goods in our warehouse in China. We assume the import of the products, we pay the customs duties on behalf of the client. Basically, we take care of everything,” concludes Marius Grada.
