China's port and shipping firms are preparing for another wave of supply chain disruptions that may be prolonged due to the mandate of China's national lockdown. The pandemic also led to a significant decline in international decline that could hurt the industry's revenue generation.
Since the allowance of resuming to business, the backlogs of cargoes overwhelmed businesses that resulted in shutdowns of logistics channels in other major economies. Exporters and industry analysts then warned that global demand for products made and shipped out of China would experience significant declines in the coming months.
According to the vice president at HIS Markit Rahul Kapoor, "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, reported Yahoo! News.
Last month, Beijing announced that only sporadic domestic transmissions are occurring in China since March. Hence, the government allowed ports to restart their business activities as the industry continues to clear their backlog of cargoes.
The report then revealed that China's container processing volumes dropped by 10.6 percent in the first two months of 2020 compared to 2019 values. Exports also declined by 17.2 percent from last year's yield.
The export declines could also possibly last throughout the year. Senior China Economist at Capital Economics Julian Evans-Pritchard explained that China's second-quarter exports may only contract 30 percent of its full capacity yearly.
The secretary-general at China Ports and Harbours Association Ding Li then claimed that the economic concern among ports and shipping companies has hampered industry demand. He said that the global pandemic adversely affected production in China that also extended troubles in the logistics industry.
According to closely-tracked cargo metrics by the Shanghai Shipping Exchange, slowing demand in the market for consumer products has also been imminent in key centers. Container vessel utilization rates from Shanghai to the US and Europe were only at 85 percent last week. The number was down by ten percentage points compared to last week's yield.
Freight rates also declined worldwide. Europe experienced a 3.1 percent weekly drop in the last week of March to 764 USD per 20-foot equivalent unit (TEU). Routes to the US West Coast also experienced losses at about 2.2 percent at 1,515 USD per TEU.
Ding noted that it may take a longer time for the cargo-handling data to express the full extent of the global demand contraction. He revealed that some ports are still clearing their backlogs, but declines are imminent considering the huge drop in global demand.
