Asia Pacific Market Update | Vol. 6

The Latest Market Update

• RCEP heralds a new era of Asia trade. The Regional Comprehensive Economic Partnership (RCEP), which comprises 10 mainly Asian countries, will come into effect on January 1, 2022, to create a new era of ultimately tariff free trade in Asia. RCEP, comprising China, Japan, New Zealand, Australia, Brunei, Cambodia, Laos, Singapore, Thailand and Vietnam, will become the world’s largest free trade area, handling around 30% of total global trade. RCEP will slash regional tariffs among member countries and will be eliminated for 90% of goods by 2032. RCEP will also strengthen economic and trade collaboration especially on the China-Japan and Japan-Korea trades. Efforts will also be made to standardize trading rules and procedures and remove nontariff related barriers as much as possible to reduce supply chain costs in the region.

• China power shortage: Key manufacturing areas in China including Guangdong, Jiangsu and Zhejiang have been affected by electricity rationing with about 20 of the 31 provinces in China having been impacted to varying degrees. The shortages have been caused by several factors including high coal prices, unpredictable weather patterns and the introduction of tougher energy and emissions. While China has increased coal production and some of the restrictions eased in early November, Hamburg Süd has identified three measures customers can take to mitigate any disruption to supply chains.

1. Constantly monitor the supply situation to adjust manufacturing and logistics schedules;

2. Stay in regular contact with local vendors and partners, who will be able to best monitor the local electricity distribution plan so disruptions to supply lines can be addressed earlier;

3. Reach out to us and discuss mitigating actions that may reduce cargo delivery delays.

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