Cotton companies' spot railway freight rates have been reduced

Recently, some cotton enterprises and operators in Xinjiang have reported that although there has been an increase in inquiries from small and medium-sized cotton textile factories, the quality requirements for cotton skins are not high (length of 28mm or above, strength of 28CN or above, and horse value below 5.2 are all acceptable). However, most cotton textile enterprises have put forward the requirement of "delivery to the factory, payment upon delivery", which is somewhat difficult for cotton enterprises, especially for cotton enterprises that use loans from Agricultural Development Bank of China, credit cooperatives, and other commercial banks to operate. Due to the requirement of fully paying off loans for cotton to be released from supervised warehouses, cotton companies generally demand that supervised warehouses within and outside Xinjiang pay in cash and spot goods, do not extend credit, and do not accept acceptance bills or domestic letters of credit.

A cotton company in Aksu stated that since mid to late March, some customers in southern Jiangsu, Henan, Hubei and other regions have contacted for goods and offered prices 100-150 yuan/ton higher than the market price. However, the seller needs to transport the goods to the factory by car without paying a deposit. Considering the high risk, the cotton company cannot accept the "cash on delivery" condition.

Recently, some cotton related enterprises reported receiving a notice from the Freight Department of Urumqi Railway Bureau to lower cotton freight rates by 30%. Cotton warehouses in Aksu, Bachu and other places in southern Xinjiang also stated that they have received a notice from the railway bureau to adjust cotton transportation prices before the end of March, but the expected reduction is not as significant as 30%.

After the Spring Festival, the overall price of cotton transportation from Xinjiang by car has decreased, and the cost of directly shipping from warehouses to cotton textile factories in mainland China is slightly higher than the comprehensive expenditure of railway transportation (including carriage agency, inland warehouse loading and unloading fees, storage fees, etc.) by 50-100 yuan/ton or even the same. Railway freight rates have been forced to decrease. In addition, the railway freight rates have been lowered for industries such as coal and metallurgical energy. According to the "Notice on Promoting Railway Supply Side Reform and Deepening Spot Logistics Suggestions" issued by the China Railway Administration, the autonomous reduction of transportation prices by each railway bureau has expanded from the current 15% to 30%, with only a further 15% reduction. Anyway, the reduction in the cost of cotton railway transportation out of Xinjiang is a tangible benefit for cotton and cotton textile enterprises both inside and outside Xinjiang.