Problems in China again

Discussion in 'Professional Fireworks' started by Locky Smith, Apr 17, 2019.

  1. However, this whole situation also has the effect of showing the fireworks industry the true power that Huayang holds over the fireworks industry. With Mr. Ding’s single text message virtually all shipping of fireworks containers have stopped. A trickle of shipments will be made from Beihai, but Beihai will not be able to handle the total volume needed.
    Copied and pasted from an email this morning. Thankfully my shipment is consumables.

    Hope they get things sorted soon.
  2. Well if people didn’t try to illegally ship large shells and salutes it wouldn’t have happened
    Ozzieuk likes this.
  3. Matthew Tosh

    Matthew Tosh Pro Firer/Crew

    What's the back story to this please? Would anyone care to shed a bit of light for those of us who aren't directly involved in imports? Thank you :)
    GTRpyro likes this.
  4. 1.) By now you have probably heard about the stoppage of shipping through Shanghai. The announcement came in a Chinese We-Chat text directly from the Mr. Ding, the owner of Huayang Logistics. Mr. Ding listed four reasons in his text message. 1.) $200,000 per day cost associated with demurrage at Shanghai port caused by delays from China Customs. 2.) Shipping space utilization of only 30% for three weeks, feeder shipping companies are reluctant to reserve space for fireworks cabinet. 3.) Huayang directly bears the risk of an accident for any containers delayed in the port. 4.) Huayang fears the risk of customer claims if the shipments are delayed.

    Not since the Feb. 2008 warehouse accident in Sanshui has the fireworks industry faced a similar shutdown. We are all hoping this is a negotiation tactic in an attempt to force the China government’s hand, and that this drastic measure will result in a fast resolution. However, until there is some resolution, fireworks shipping will be greatly reduced as Beihai port remains the only viable port for shipping. Unfortunately Beihai’s size just can’t support all the containers that need shipped.

    The problems that have led to this dire situation started several months ago when China Export Customs (CIQ) reorganized. With new leadership came changes to the fireworks export processes. AFSL erroneously reported the issue was driven by “serious fireworks accidents”. This is incorrect, the real problems began after a major explosion occurred on March 21st at a pesticide chemical factory. 617 people were injured and at least 78 were killed. China CIQ is responsible for all hazardous materials in China, so the same people responsible for the pesticide factory are responsible for fireworks and reviews of all processes began. Trouble arose when Hunan CIQ agents realized that fireworks goods from Jiangxi Provence were being shipped on the same containers as Hunan Goods. Fireworks are unique in that one container often contains dozens of different products made at different locations. Hunan CIQ refused to allow product from Jiangxi and vice versa. Initially it looked like the problem would resolve itself quickly, but as the week closed no official resolution was found. This put Huayang Logistics in the difficult position of operating with no clear resolution and thus if there were an accident potentially being held accountable.

    However, this whole situation also has the effect of showing the fireworks industry the true power that Huayang holds over the fireworks industry. With Mr. Ding’s single text message virtually all shipping of fireworks containers have stopped. A trickle of shipments will be made from Beihai, but Beihai will not be able to handle the total volume needed.

    We are hoping that economics will overcome risk aversion for CIQ. CIQ is responsible for both compliance and tax collection. So if there is no shipping, then there is also no tax collection. However, realistically the entire fireworks industry is not that large. So Huayang’s move to halt shipping is a risky gamble. If the China government decides that the tax income does not outweigh the risks, then the fireworks industry will be in dire straits. At this point there is no viable back-up plan for replacing the role that Huayang plays. So at this point everyone is assuming this will be a temporary shutdown and normal operations will resume soon.

    In the mean time we have begun rebooking all containers through Beihai. So far we have secured four bookings with all others pending. We will be in touch with you directly if you still have any unshipped containers. I caution that a booking does not guarantee a shipment as bookings can be delayed, canceled, etc.
    Ozzieuk likes this.
  5. Matthew Tosh

    Matthew Tosh Pro Firer/Crew

    Locky Smith likes this.
  6. maxywell

    maxywell Supports UKFR

    Is that something that only affects cat 4 or could it impact on cat 2/3 stuff as well?
  7. All fireworks
  8. hofnerite

    hofnerite UKFR Stash Photo 2018 Winner! Supports UKFR

    It's rare that a year goes past without news of some kind of disastrous shipping disaster or late fireworks, explosions at the docks, heatwaves shutting factories down, the Chinese government holding companies ransom...
  9. Shame we can't go back to making our own fireworks as it used to be!, before long the situation in China will get so bad nothing will be guaranteed and we will just have to put up with what we can get!
  10. It is slowly coming back, some UK colour shells will be demonstrated in August hopefully.
  11. Weekly Report:

    1.) Shipping Crisis:

    Based on the facts below, only a small number of fireworks containers are departing from HK each week. Per our investigation this is impacting all companies equally. Many companies are saying “we have connections in Beihai” in an effort to impress you, but after investigation all those promises turn out to be false. Everyone from a small importer to TNT seems to be facing the same bottlenecks described below. We shipped 5 containers last week. However, the bottleneck described below is getting worse with each passing day.

    The Liuyang government is sending a delegation to Beijing on April 29th in an attempt to negotiate a resolution. However, everyone expects it will take weeks or months for a final resolution to be reached. Shanghai can still ship fireworks, however the logistics companies servicing Shanghai have stopped loading product to Shanghai because of issues with China Customs. Containers loaded in Liuyang prior to April 15th are still departing from Shanghai, but none after that date. This leaves only Beihai shipping fireworks. However, there are two bottlenecks at Beihai. 1.) is the port restriction that only 16 fireworks containers can be in the port at any given time. 2.) The next bottleneck is the small “Feeder Boats” that move the containers from Beihai to Hong Kong. There is just one company and just four boats. Two more have recently been added, but one just broke down. Each boat can only hold between 20-40 containers. There are still approximately 1,500 – 2,000 containers not shipped for the USA season. Because of the bottlenecks, the assumption is that only a very small portion of those containers will arrive in time for the USA season.

    There are several logistics companies taking bookings for Beihai such as ITTI, World Chance, Apex, Huayang, etc. However, all of them must share the same six feeder vessels which are owned by a different company. So while ITTI is offering a priority program for the “Ocean Vessel”, the program still does not help with the feeder vessel problem.

    Guangdong Province is right next to HK. So shipping to Guangdong makes more sense than shipping to Beihai. However, ever since the 2008 fireworks warehouse explosion in Guangdong, the government of that province has banned all fireworks. Even in HK the feeder vessels load the fireworks from one boat to the other. The fireworks never are moved onto land in HK. If there are any sort of rough seas this cross-boat loading can’t happen. So often feeder boats make it to HK and can’t transfer the fireworks to the Ocean Vessel until the rough seas calm down.

    Dominator has staff in Beihai right now trying to expiate loading. The photo of the feeder boat was taken two days ago and is the actual vessel. We have explored ways to resolve the bottleneck, but everyone assumes that this problem is temporary, that Shanghai will reopen and that Beihai is not a long term solution. Therefore, no one wants to commit more feeder vessels as the investment would be very large. Because of this, we do not feel there is any short term solution. We were lucky enough to ship 5 containers last week. Every company will ship a few containers each week, but no one will be able to ship all. Who gets loaded and who is left behind is really coming down to luck of the draw. For example, yesterday’s feeder vessels stayed at Beihai several hours waiting for last minute arrivals. Because of this delay, they arrived in HK late and missed the ocean vessel. So two of our containers were delayed because of this reason. We feel the best advice if you still are waiting for product, is to choose from stock, let us book a vessel and get in-line for loading. Only those waiting in-line have a chance to load.
  12. China will not want 1000’s of containers of explosives lying around!
    Vivid Pyrotechnics and Pyromania like this.
  13. Most factories stopped production already
  14. Pyromania

    Pyromania Pro Firer/Crew

    But surely those factories won’t want to be stopping for long - especially as they know that come summer they’ll no doubt be forced to shut down again?
  15. Pauld201

    Pauld201 Pro Firer/Crew

    All this messing around is just going to end up with people looking to other county to start producing or increasing firework production.
    Just because China has the monopoly right now doesn’t mean long term they’ll keep it. Importers will get tired of all the hassle and start looking elsewhere if they’re not carful.
  16. Here is an update we just received from china:

    "After high-level coordination, Changsha Customs agreed to supervise customs clearance from May 1 to May 20, according to the usual practice. All distribution companies, export enterprises and logistics companies are requested to be ready. Xingsha Customs Liuyang Office and relevant government departments in Liuyang May take no vacation, and must fully support shipping! The specific methods of operation will be announced later this afternoon."

    This means shipping will start again temporarily from 1.5 to 20.5 from shanghai to reduce export pressure.

    I hope this will be extended..
  17. Hi Everyone,
    Always problems in China from explosions, heatwaves, flooding and shipping to name a few. Locky Smith's Information is correct, but you have to find ways to avoid the problems that arise from these issues. Some factories did stop production if they did not have enough storage, 8 years ago we started renting warehouse space in China to help with stock supply and be in more control of our shipments of product. None of Celtic's 2019 production stopped as Alice informed all the factories to continue with production and ship everything to our warehouse in Liuyang. We have 3 containers on the water with another 4 leaving in two weeks, plus large stocks in Alconbury. There has been a big move for companies to hold as much product as possible (cash flow dependant) with some planning upto a year ahead. Pre ordering product has been working for Celtic and its customers for the last 6 years and with our supply of pre orders at a a level of 95% and above.
    We will continue buying nearly all of our product form China as anyone who has seen some of the new effects both cakes and shells coming out of China will agree that they are absolutely amazing.