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Helpful information

Cross-Border Disorder: Fashion Brands Face Delays in Delivery from PRC

Russian clothing and footwear companies faced delays in the supply of their products from China. Izvestia was told about this problem in Melon Fashion Group (brands Zarina, befree, Love Republic and Sela), Econika and Akhmadullina Dreams networks. A queue of more than 1,000 trucks has formed at the Chinese-Russian border, and for a month now the trucks have not been able to pass the border control, said Vladimir Matyagin, head of the Gruzavtotrans association.

The FCS explained this by tightening control at customs from the Chinese side - because of the pandemic, the Celestial Empire introduced quotas for the passage of trucks. Now only 130 cars can cross the border per day, but not all of them manage to go through Russian customs on the same day, said a source familiar with the situation. According to participants in the retail market, delays in deliveries threaten a shortage of goods on the shelves, an increase in logistics costs by 15%, and in the future, probably, products by 3-5%.

The package did not arrive

There are tangible delays in the passage of goods at the Sino-Russian border, Mikhail Urzhumtsev, CEO of Melon Fashion Group (which combines the brands Zarina, befree, Love Republic and Sela), told Izvestia.

“This is a significant problem for us, since we have four large brands and very large production volumes in Chinese factories,” he said.

The presence of difficulties was confirmed by the representative of the press service of Akhmadullina Dreams. According to her, the problems with delays in the delivery of goods are associated with the limit on the passage of transport and lengthy inspections at customs, so the company transferred part of the deliveries to air transportation, which are carried out faster.

China is the leader in imports of light industry goods in absolute terms, said Anna Lebsak-Kleimans, General Director of Fashion Consulting Group. It accounts for 43% of the world's imports of these goods to Russia. Accordingly, underdelivery can now amount to about 10% of the market, the specialist estimated. We are talking about collections in part of autumn, winter and even spring. For brands, this is a large volume, companies run the risk of losing profits, she said.

Each collection has a sales period at the original price, and then discounts begin, which reduce profitability. Therefore, if a part of the product is not presented on the shelves, it will disrupt the mechanism for selling the entire collection, said Anna Lebsak-Kleimans.

Delays in the supply of goods lead to higher prices, added Aleko Iliopulo, CEO of the Econika chain.

“But we cannot raise prices in direct proportion to costs, as customers may not be willing to buy more. While the logistics costs are borne by the company. The price increase may amount to 3-5%. But the final price will be adjusted by market conditions, he said.

According to the company's forecast, the problem with delays in the supply of goods may persist until February 2022.

Antique China

The congestion on the Sino-Russian border began to form in mid-August. Then it was about 300 trucks that were waiting in line to go through customs control. In September, their number exceeded 1,000.

As the Federal Customs Service told Izvestia, one of the main reasons for the congestion of cars is the strengthening of antiquated measures on the part of the Chinese side. Also, the congestion is associated with non-compliance by carriers with the new procedures for the import of goods. This was also confirmed by the Gruzavtotrans association. According to its president, Vladimir Matyagin, the Chinese customs service has introduced daily quotas for the passage of trucks.

The driver of one of the trucks, who is now awaiting his turn at customs, told Izvestia that the quota implies the passage of 130 vehicles per day, but the Russian customs service manages to process at best half of them.

According to the Federal Customs Service, the throughput of the Chita customs point is higher. For example, on September 29, 2021, employees of the Zabaikalsk customs post issued 280 vehicles: 126 for leaving the Russian Federation and 154 for entering. The checkpoint's throughput is 280 freight vehicles in both directions per day, the FCS said. At the same time, the customs authorities are taking the necessary measures to speed up operations, the service noted. Employees from other divisions of the customs post are sent to the border. But the situation is complicated by the lack of queue regulation.

- From the Chinese side, lists are drawn up that establish the priority of passing through customs control. But many cars drive up to him through the fields bypassing the queue and pass control faster. Because of this, there are fights between the drivers, - said the source of Izvestia.

There are no alternative ways to export goods now, said Dinar Khabibullin, founder of the Diazan group of companies for the transportation of goods. According to him, delivery by rail takes a very long time, and air and sea transportation has grown in price. The demand for them is high on the part of companies from Europe and the USA - most of the traffic is now going in these directions, and there are practically no free containers for Russia, the expert says.