Importing Cars to Kuwait: Yuan and Freight Math

The key point this week is not the FOB quote but two curves pulling landed costs opposite ways. The yuan fix hit 6.7521 on 18 September, an eighth gain in a row; SCFI printed 3687.83, Europe down 6.48%, the US West Coast up 3.01%.

That is not a weak-dollar story. The Fed hiked 25bp to 3.75%-4% on 16 September, and the dollar index closed at 100.248. Exports did the work: 20.17 trillion yuan in eight months, up 14.6%, lifting the fix 222 pips in a week. Freight ran opposite, Panama lifting North America and Suez sailings cutting Europe.

Run the numbers. A car at 120,000 yuan costs 17,714 dollars at Friday's fix of 6.7743 and 17,772 at 6.7521, so 58 dollars more in a week; on the yuan's 4.1% gain this year it is 730 dollars above January. A 40ft box to Europe fell 255 dollars to 3,683, saving 64 to 85 dollars a car; the US West Coast rose 221 dollars to 7,560, or 113 to 132 a car with the yuan.

On Europe and the Mediterranean the 6.48% freight drop covers the 0.33% weekly currency move: lock the car price, keep the sailing date open. On US lanes book three to four weeks out. For Kuwait and the Gulf, Ningbo's Middle East index hit 5321.9 points on 4 September, 43.03% above mid-July.

Four moves. Ask for three lines: RMB price, reference rate and date, freight validity. Add a currency clause at the payment-date fix with a 1% dead band. Track sensitivity: each 1% of appreciation costs 178 dollars on a 120,000-yuan car. On credit terms, confirm cover and premium with an export credit insurer.