Chinese logistics firms shift away from Middle East as war raises costs

Chinese logistics companies are scaling back operations in the Middle East, as the current war continues to heighten geopolitical risks and disrupt global trade.

Instead, firms are reallocating resources to other regions, including Africa, Southeast Asia and the Americas.

A senior executive of an international logistics company with a full-chain operation in Dubai, in the United Arab Emirates, said the company operates a customs brokerage, overseas warehouses, container truck fleets, and pickup truck fleets in the region, with a team of over 100 people.

Due to the current situation, most of their Dubai-based colleagues are now working on a flexible basis, and some staff have already returned home early for holidays.

"In light of the development trends of the Middle East war, our business footprint in the region will further shrink. Therefore, we will increasingly allocate our resources to routes serving Africa, Southeast Asia, and the Americas, including redeploying personnel to other countries as part of our new layout," said Fan Jiansheng, head of an international logistics company based in Shenzhen, Guangdong Province.

While companies are actively adjusting their layouts and shifting to other regional routes, they face the pressure of rising freight rates.

"On other routes — the United States, Europe, South America, and Southeast Asia — freight rates have risen by 10 to 20% or even more, whether by air, courier, or sea, due to rising fuel surcharges," said Li Liangjuan, head of a freight forwarding company based in Shenzhen, Guangdong Province. "From the end of February to the beginning of April, rates have gone up four or five times in just one month," she added.

In response to the continuing trend of rising freight rates, many European and American trading companies and cross-border e-commerce businesses have begun bulk purchasing and stockpiling in advance to hedge against further rate increases.

"Combined with current order demand, many of our warehouses in North America are now completely overloaded," said Zhao Kaijie, head of a warehousing and logistics company based in Shenzhen, Guangdong Province.