COVID-19 AND INTERNATIONAL TRADE
Updated: Apr 1
The new coronavirus, COVID-19, is affecting not just China anymore, but the whole globe today. It 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, so what is actually happening and what is the forecast for the future?
Governments and companies are building their strategies of how to cope with the COVID-19. As events continue to unfold, a serious evaluation of changing suppliers, altering logistics routes, and updating sourcing will become more likely as companies navigate these events in search of a safe harbor. Therefore, at the moment, it is more likely that countries with smaller coronavirus outbreak might have an increased demand for relevant products whereas countries with larger outbreaks can have a slowdown in international trade.
Germany, France, India, and other countries have issued export bans on medical protective equipment, drug ingredients, and medicines, citing increased global demand and concerns of domestic undersupply.
France has ordered a review to identify French industries that rebuild “economic and strategic independence” from Asia-based supply chains, highlighting the pharmaceutical industry as over-reliant on Asia, as well as the automotive and wine industries.
Electronics manufacturers have been told by suppliers to expect COVID-19-related shipping delays, and greater than a third of electronics manufacturing executives expect delays of up to six weeks or longer.
The global shipping industry is losing approximately $350 million per week due to COVID-19, and the effects of canceled sailings and upended logistics are causing major issues in the global shipping industry, such as a surplus of refrigerated containers stranded in China and short-supply elsewhere, although there are some signals last week that China manufacturing is coming back online, and related ocean container traffic and trade flows may follow.
Governments start to impose rules that narrow people's movement and ban entry of nationals of foreign countries that the list keeps growing, but 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 over 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. “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