According toThe Wall Street Journal, the coronavirus pandemic has exposed the fragile nature of businesses and economies built on the flow of goods around the world, with supply chains rattled by factory shutdowns, expensive ships sitting idle and cargo terminals closed for the lack of trade.
That has led to growing calls by world leaders to rein in global supply lines and bring more manufacturing back to domestic markets. But the operators of the mammoth vessels that are the backbone of the trading economy aren’t banking on a retreat from globalization soon.
The owners of ships, from the hulking bulk carriers that haul iron ore and other metals to the improbably large container ships that ferry retail goods and manufacturing parts across oceans, have trimmed their sailings in response to the global downturn. But for seagoing companies, the pandemic is a detour from entrenched strategies, not a change of course.
That is because they believe the enormous production network China has built over the past 20 years, a sprawling system of factories that churns out electronics, toys, clothing, medicine and industrial goods for the rest of the world, will remain a driving force of trade.
“China will continue to be the world’s factory because nothing else comes even close,” said Peter Sand, chief shipping analyst at industry trade body BIMCO. “They built a massive logistics ecosystem that keeps global trade ticking, and they are really good at it.”
With China’s labor costs about one-fourth of those of the U.S., according to the World Bank, and its distribution channels designed to facilitate mass exports, setting up factories in the West to replace Chinese goods or make up for temporary production lapses would be a daunting proposition.
China’s maritime infrastructure on its own would be all but impossible to duplicate in Western countries.
China boasts seven of the world’s 10 biggest ports, including that of Shanghai. The runaway leader in terms of volumes, the Port of Shanghai handles nearly three times as many containers every year as the top U.S. gateway at the neighboring ports of Los Angeles and Long Beach combined.
Shipping companies have adapted to the China volumes by deploying a special class of container ships that are as long as three football fields and that can each move 23,000 containers.
These vessels are shared even among rival operators to move cargo and make port calls, cutting the cost of moving boxes by about a third from that of the earlier class of big ships, provided they are full.