The new coronavirus, COVID-19, is affecting not just China anymore, but the whole globe today. The crisis has changed daily life for nations by forcing everybody to avoid social contact and stay at home in order to prevent the spread of dangerous viruses. Equally, businesses and international trade are having an impact due to a global health emergency.
The situation is changing every day: people are emptying shelves, ports and supply chains experiencing disruptions, the demand for basic products grows and drops suddenly, and many more effects.
Therefore, the main question is:
What is the current situation in the international trading industry and what is the forecast for the future?
Governments and companies are building new strategies of how to cope with the COVID-19.
A serious evaluation for changing suppliers, altering logistics routes, and updating sourcing will become more likely, as companies navigate these events in search of a safe harbour.
As a result, countries with smaller coronavirus outbreak had already experienced an increased demand for vital products. Whereas countries with larger outbreaks can have a slowdown in international trade.
- Germany, France, India, and other European countries: bans on medical protective equipment, drug ingredients, and medicines, have been executed; increasing concerns of domestic undersupply.
- France has concentrated all efforts in building an “economic and strategic independence” from Asia-based supply chains. French companies are to supply the domestic demand for products. Industries such as the pharmaceutical one as well as the automotive and wine industries were highlighted.
- Electronics manufacturers have been experiencing COVID-19-related shipping delays. Greater than a third of electronics manufacturing executives expect delays of up to six weeks or longer.
- The global shipping industry has lost approximately $350 million per week due to COVID-19. Such is the result of cancelled sailings and upended logistics, causing major issues in the global shipping industry. Some examples are the surplus of refrigerated containers stranded in China and short-supply elsewhere.
In addition, governments started to impose rules that narrow people’s movement and ban the entry of nationals of foreign countries. However, the trade for essential products is still allowed as nations have to be provided with necessary products.
Unlike the financial crisis in 2008, the demand is expected to grow in a short amount of time once the COVID-19 outbreak is over.
China had a quick response to the virus and was able to slow the spread and almost stop the virus in 2 months’ time. If other countries would follow a similar pattern and obey the rules set by their local authorities it could also be stopped by April.
“Now that we are in the coronavirus environment, uncertainty has expanded exponentially,” Hackett Associates Founder Ben Hackett said. He added: “Our projections are based on the optimistic view that by the end of March or early April some sort of normalcy will have returned to trade”.
Thursday 5th March –
The International Chamber of Shipping (ICS) has issued brand new guidance for the global shipping industry to help combat the spread of the Coronavirus (COVID-19). It includes advisory pages for print-out. The comprehensive 22-page document can be found here: https://www.ics-shipping.org/docs/default-source/resources/coronavirus-(covid-19)-guidance-for-ship-operators-for-the-protection-of-the-health-of-seafarers.pdf?sfvrsn=6