Importing From China With Falling Exchange Rate

Here at K&L freight we are now constantly being asked ‘ how do I cope with importing from China now that sterling has now collapsed?’

Aside from the fact that sterling has recovered – at least partly – against the dollar and let’s hope it stays that way, there are other factors that come into play when sourcing goods from China.

The immediate reaction from some of our customers to the sterling’s collapse has been to attempt to persuade their Chinese supplier to sell to them in Sterling.

All we can say is that you will be very lucky indeed to get a Chinese supplier to agree to this.

Chinese Trading Currency

Not only would you be attempting to pass the costs of sterling’s depreciation to your supplier, which we think would not go down well at all, the more or less universal trading currency for Chinese manufacturers is the dollar to any international customer.

This may be as the dollar is seen as the world’s reserve currency and is the least likely to depreciate, or possibly the reason is that the USA is still China’s largest market, even though they impose a 25% penalty duty surcharge on most imports from China.

Even the EURO with the might of the Eurozone behind it has so far failed to break the dollar’s stranglehold on world trade and is hardly recognised in China.

Ocean Freight Rates

All is not lost though, through the summer of 2022 ocean freight rates have fallen from China to the UK and the pace of reduction has sped up in the last couple of months.

We are now at a stage where rates are at around a quarter of what they were a year ago. We cannot think of another industry where such a massive fall in prices would occur.

Many of our customers are reporting that the freight rate drop is more than counteracting the sterling’s decline so in real terms the landed value of what they are buying from China has in fact fallen, not increased!

For all importing / exporting freight queries, please contact our friendly team of experts today.  We will happily advise you on the best course of action and how we can help you.