Biggest Global Trade Hit in DecadesBy Miriam Bello | Mon, 03/30/2020 - 13:38
Global crises inevitably change the world’s way of working. From the Great Recession to 9/11, trade flows are always affected. However, no modern crisis has hit the world has hard as COVID-19’s. Robert Koopman, Chief Economist of the WTO, has defined this as a “war-like” scenario without the physical destruction or violence.
The silence that China’s trade generated last month has resulted on diminished traffic at the busiest ports around the world, which could lead to a collapse that could last at least the first half of the year, according to many economic opinions. The US trade dynamic has been specially impacted on its export flow. Carriers have blanked 21 sailings on the US-Asia Pacific trade route with the primary reason being weak demand in China. These cancelations follow 66 others that took place during the Lunar New Year.
The US experienced an unprecedented 45 percent year-on-year slump in imports from China during the first two weeks of March, according to S&P Global Market Intelligence. The consumer electronics industry is taking a hard hit with a 66 percent drop in Chinese shipments of machinery and electronics and a 64 percent decline in imports of computers compared to 2019.
The greatest cancellations are expected for Maersk because of its large exposure to container shipping and port terminals. A representative of the company has already stated that the company expects lower volume demand in the coming weeks.
Phil Levy, former White House Economist has said that “if we are already starting to match Great Recession statistics, that means we are on pace for the modern record.” The crisis is specially hitting the shipping industry, which transports about 80 percent of the world’s food, energy, raw materials and manufactured goods.
The International Chamber of Shipping (ICS) implemented certain preventive measures for COVID-19. Ports and global shipping can continue to operate, although all major ports across the world have adopted a 14-day quarantine period for vessels arriving from or transiting through China. Drops on global supply chain linger and even China, which is gradually beginning to recover after its cases first emerged in December, is still having trouble rebooting its stalled supply chains.