MARITIME TRADE QUARANTINED

China is gradually recovering from the pandemic which is spreading to other parts of the globe bringing them under quarantine, once again highlighting the vulnerability of the global supply chain

- OMER AHMED SIDDIQUI

The Coronavirus outbreak has once again highlighted the vulnerability of global supply chain. China – still the source of 65 per cent of trans-Pacific containerized imports remains in the early stages of restarting production, following the pandemic outbreak. China’s exports contracted by 17 per cent in dollar terms in January and February, but port call data indicates activity at Chinese ports has begun to recover from early March. Economies dependent on China-based production are highly vulnerable to the adverse impacts on the modes of the supply chain, namely in commercial aviation, maritime shipping and overland.

As the pandemic spreads to Europe and the US, the shipping industry will now have to contend with falling demand there. Following the US-China trade war that had slowed down the pace of global trade growth to its slowest pace since 2009, the Coronavirus outbreak has given the next shattering blow to the global trade. As per data published by Allianz Research, in the first quarter of 2020 the global trade has suffered damage equivalent to a full year trade war between US-China. The loss in trade of goods and services is estimated to be $320 billion per quarter of business disruption. Export losses are expected to peg at $161 billion as demand from China and Europe is expected to be subdued till the end of April. The return to normalcy of trade is expected to be very gradual and losses to the transport sector are forecast to be at least $33 billion.