Why US retailers want Chinese suppliers to bear shipping costs
What's the story
US retail giants are asking their Chinese suppliers to share or even bear the full cost of shipping goods across the Pacific Ocean.
The demand comes as freight rates soar amid trade war disruptions, sources at Chinese export firms told the South China Morning Post.
This is a major shift from the previous practice where American retailers bore all shipping costs due to long-standing relationships with global shipping companies.
Cost absorption
Chinese factories under pressure
The change in shipping cost responsibility is putting a lot of pressure on Chinese factories.
Exporters from Zhejiang province, who supply goods to America's leading hypermarket chains, have confirmed that they are now being asked to bear part or even all of the transportation costs for goods sent to the US.
Stage Group, a major garment manufacturer from Zhejiang, has been covering logistics costs for 60% of its US-bound shipments since late May.
Tariff shift
Suppliers also bearing tariff costs
The pressure on Chinese factories isn't just limited to shipping costs.
Earlier this month, sources told the SCMP that US retailers are also asking their Chinese suppliers to bear up to 66% of the costs of US tariffs.
Previously, these fees were paid by American buyers. This further highlights the growing trend of cost-shifting amid trade tensions between the two countries.