The global shipping industry disrupted severely by coronavirus spread as China remains the pillar of the global entwined supply chain. With the second-largest economy in the world in complete shutdown due to coronavirus, the global economy is likely to bear the consequences.
Reduction of Shipments from and to China
China facilitates the global shipping transportation of around 80% of the world’s trade volume as it home to the world’s 10 busiest container ports. Maritime data, Alphaliner, provider confirmed that China has cut international supply chains to control the outbreak of coronavirus. It has projected that hit on China’s decisions will reduce global ocean volume containers by 0.7% over the year. Further, container vessel calls at or through major China ports have shown a decline of more than 20% since January 20. Besides prediction of slowdown being extended till March is resulting in the rapid fall of tankers and ship bookings. In addition, box volumes have come down by 23% in the last three weeks. Moreover, the world’s top 10 operators have revoked at least two dozen sailing to China. Citing this, Hyundai Motor Co. declared to suspend productions in its seven key plants.
While Kia motors shit its South Korean Plant due to a shortage of parts from china. Besides, there are many vessels lying on ports waiting to be repaired due to a shortage of repair service. Moreover, the tanker market of China is shaking as OPEC countries demand an agreement to cut daily production due to demand decrease from China.
Goods Stranded at the Port
Shipping companies declared that several manufacturers in China and around have shut their processes to minimize the virus spread. As a result, ocean-going vessels to and from China Have been reduced. Besides, several ships remain under floating quarantined zones loafing as Australia and Singapore have refused to allow these to enter in fear of their virus in the crew. Several shipping giants like Maersk and Hapag-Lloyd have decreased vessels linking China and Hong Kong with India, Canada, the United States, and West Africa. Logistics companies advised countries to either go for air shipment or source goods from other countries.
Global Shipping Freight may lower due to Coronavirus
Gasoline and jet fuel demand have faced a triple hit due to a decrease in travel in China. The trade of these two commodities from the Middle East to Singapore plays an essential role in determining freight rates. Besides, a sluggish economy has left surplus barrels for export from China. As a result, China refineries have reduced their production which would decrease crude imports and hit the earnings of tankers.
In all, the widespread of coronavirus is clogging up the global trade.