CORONAVIRUS: Impact on China’s global trade and shipping industry

CORONAVIRUS: Impacto al comercio exterior y transporte marítimo

The slowdown of the consumerism factory, the global supplier: China, in response to the deadly Coronavirus has generated a considerable impact on global trade and the shipping industry in China. Analysts point out that the fall in the volume of imports and exports from and to China will leave a mark on commodity trade for months.

All segments from oil tankers to containerized lines have been impacted by the slowdown of factories and travel restrictions imposed across China to control the possible pandemic. Ship indexes such as Capesize, which tracks freight costs for larger carriers of dry bulk products such as iron ore, coal and grains, fell into negative territory last week for the first time since its creation in 1999, which indicates that shipping companies are losing on certain routes, “says Harry Dempsey and Sun Yu for the Financial Times.

Oil consumption is projected to be reduced by 25% as of February, 3% of world demand, which would plummet the barrel of Brent crude oil by 15% this year. Consequently, the charter rates of super-tankers carrying oil have also fallen 75% from $ 140,000 to $ 23,000 per day. However, the times of crisis are also moments of opportunities for which the storage of oil in super tankers could help alleviate operating costs.

In the case of a containerized segment, AP Moller-Maersk has canceled 20 departures from China since the initial infection. Some shipowners did not allow the berthing of their ships in China for the risks and others exchanged premiums for trips to these ports.

According to the WSJ, the losses of the containerized lines amount to $ 350 million per week in volume of lost cargo. 350,000 cargo containers have disappeared from the volume of the world trade network, says Sea-Intelligence, the maritime data firm located in Denmark. Cancellations belong 56% to Trans Pacific services and 46% to Europe services.

From the quarantine, the shipyards are deserted, slowing down new ship constructions, maintaining dry docks and ship owners losing a lot of money. The largest shipyard in China, in Jingjiang, near Shanghai, has been denied two opening requests by the local government.

In the port of Wuhan, the predominant cargo is medicines and supplies, there is no capacity to handle other types of household goods or general cargo. The general capacity utilization of the most important Chinese ports is 20% to 50% lower than normal and more than 60% in the ports states that their storage capacity is 90% full. as reported by the Shanghai International Shipping Institute survey. As for the income of the ports. The epidemic is projected to reduce them from 10% to 20% if it is controlled in May. Now, if extended, the effect will be much greater.

In the neighboring mega ports, ships with quarantined and hungry crewmen victims of a sanitary measure due to their last port calls. Generally, involuntarily requesting an extension of working time on the high seas for up to 6 months as a result of the restriction to the exchange of crew among Chinese sailors, some Brokers say.

Source The Financial Times The Wall Street Journal

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