China Fibers and Textiles Oct 2016 | Page 2

New transportation regulations weigh on spinners' cost

2. The width should be no more than 2.55 meters

Normally, the width of vehicles reaches 2.2-2.45 meters and it is not likely to exceed the width. For cotton bales, no more than 5 bales (incl. 5 bales) should be put in a line.

3. The length should be no more than 18.1 meters

According to survey, vehicles to transport cotton is normally 17.5 or 13.5 meters long, so it will not exceed the limitation.

4. The total quantity of two-axle vehicle is 18 tons at most, that of three-axle vehicle is 25 tons at most, four-axle vehicle is 31 tons and five-axle vehicle is 43 tons.

Previously, cotton is mainly used four-axle vehicle with the quantity of 36 tons (about 160 bales of cotton) and now, as the four-axle vehicle should be no more than 31 tons, one vehicle can only transport about 136 bales of cotton.

Therefore, the transportation cost of cotton is bound to witness increase. Currently, as the new regulations are just implemented, many logistics companies are cautious to operate. It is heard that the freight from Xinjiang to Henan has increased by 200yuan/mt to 800yuan/mt and that from Xinjiang to Hunan and Jiangxi has reached 1,000yuan/mt, higher about 200-300yuan/mt. The higher freight weighs on cotton users’ costs. In Xinjiang, offers for new cotton are pegged at 15,500-16,500yuan/mt, though there is subsidy of 500yuan/mt, plus the freight, the offers from Xinjiang to inland are at 16,000yuan/mt at least.

Besides, the purchase price of seed cotton (machine-picked) is highly at 6.7-7.2yuan/kg and prices of new cotton will tick up further following higher freight. For the transportation by trains, the prices have not adjusted and are lower than that of vehicles, but it takes more time.

The Ministry of Transport of China published new Regulations of Highway Administration for Overload Vehicles, leading to higher freight of cotton transportation, further to increase cotton user’s costs.

The new regulations has been implemented from Sep 21, 2016. For the vehicles, the definite regulations are showed below:

1. The height should be no more than 4 meters

For cotton bales, one ordinary bale size is 140cm long (136-140cm), 70cm high (70-85cm) and 53cm wide (50-54cm), minus the height of 0.9m of vehicles, the cotton bales are estimated to be no more than 5 bales (incl. 5 bales).