CHINA's ports and shipping firms are
gearing up for a second round of supply chain disruptions as the spread
of the coronavirus pandemic globally strangles off international demand.
With Beijing reporting only sporadic
domestic transmission of the coronavirus since March, workers have been
allowed to return to posts, factories are restarting and ports are
rushing to clear a backlog of cargoes.
But with virus outbreaks now overwhelming healthcare systems and
shutting logistics channels in other major economies, exporters and
industry analysts warn that global demand for products made and shipped
out of China is likely to dive, reported Reuters.
"We expect the near-term impact on trade growth in coming quarters
likely to be the worst ever, as economies stall and external demand
faces imminent collapse on large scale quarantine measures across major
economies," said IHS Markit vice president Rahul Kapoor.
China's container processing volumes declined by 10.6 per cent in the
first two months of 2020 compared to the year before, while exports were
down 17.2 per cent.
And while volumes rebounded in March as manufacturing and logistics
operations rebooted, exporters fear that outbound shipments may be in
for an even steeper slump in the months ahead.
"There is widespread concern among ports and shipping companies that the
coronavirus overseas will hamper demand and in return take a toll on
production in China," said China Ports & Harbours Association
secretary general Ding Li.
The export slump could drag on throughout 2020, said Capital Economics
senior China economist Julian Evans-Pritchard, estimating China's
second-quarter exports could contract as much as 30 per cent year on
year.
Some closely tracked cargo metrics are already showing the impact of slowing demand in key centres.
Container vessel utilisation rates from Shanghai to north America and
Europe were at 85 per cent last week, down by 10 percentage points from a
week earlier, data tracked by Shanghai Shipping Exchange showed.
Freight rates also dipped, with European routes down 3.1 per cent weekly
as of March 27 to US$764 per TEU, and routes to the US west coast are
down 2.2 per cent at $1,515 per TEU.
Mr Ding added it may take time for cargo-handling data to show the full
extent of the global demand contraction as many ports are still clearing
backlogs.
Daily container handling volumes at China's biggest port in Shanghai
last week hit 110,000 TEU, equivalent to 90 per cent of pre-virus
levels, and other ports are also trying to rush through shipments to
overseas clients before more stringent movement restrictions take
effect.
That demand outlook uncertainty is also weighing on material markets,
with the price of manufacturing-grade hot-rolled coil steel SHHCcv1 -
used in automobiles and appliances - falling to four-month lows this
week.
Textile and clothing manufacturers are also feeling the effects of a drop in international demand.
"Many exporters were notified by clients of order cancellations for the
next two months... leading to increasing pressure on upstream firms'
supply chain," said a statement from the China National Textile and
Apparel Council (CNTAC).
A CNTAC survey showed that 37 per cent of 242 companies reported export
order cancellations last week, while the number of firms reporting
export orders at less than 50 per cent of pre-virus levels rose by 11.4
percentage points to 26.4 per cent.
China's port association expects container handling volumes in China to
fall five to ten per cent in the second quarter from a year ago, while
imports of industrial materials such as coal and ores are also expected
to slow alongside falling domestic production.
http://www.shippingazette.com/menu.asp?encode=eng
|
Back:
Next:
