Coronavirus Update 23rd April

New Zealand is winding back to “lock down stage 3” providing similar restrictions to those currently in Australia. This means that both governments are still requesting the public to stay home unless needing to access food, health or similar essential services. Whilst a necessary health measure, this will clearly further restrict the recovery of the respective domestic economies until such time as the wider retail outlets can open with certainty of people being allowed to access them. Once restrictions are lifted it is likely that the community will take time to grow in confidence. This aligns with media reports from Europe and China indicating that there is a reticence from some to put their health at risk and venture out unless necessary.
In the interim, many retailers bottom lines will continue to be impacted. Also affecting trade is that Europe and the USA continue to have significant infections impacting their ability to manufacture and supply products, assuming they had the parts and raw materials from China to do so.
Despite the significant growth in online e-commerce transactions, speculation continues that our region is heading towards a recession with a likely extended recovery period. We clearly require ongoing government support and co-operation across our industry to minimise the adverse impacts to the international trade sector .

China – Update

Our sources from China have provided us with the following updates

  • China North East Area is still in big concern. Haerbing (capital of Heilongjiang province is starting a partially lock down. However there is no official news about the effect on Port Dalian’s operation at this stage.
  • According to Ministry of Transport of PRC(April 20), port foreign trade for 2020 is expected to reduce by 6% and foreign trade container throughput will decline by about 10% 
  • According to China ports & harbours association,  the key ports in China have reduced container throughput by approx 5% year on year.
  • According to the Global Port Tracker released by the National Retail Federation and Hackett Associates, import volume of major container ports in the USA fell to the lowest level in 5 years in March. Forecasts pre COVID – 19 for the period February thru May was 6.9 million TEU. that is now expected to be around 5.7 million TEU a decrease of some 17.3%
  •  According to The State Council Information Office of the PRC, April 17. The first Season’s GDP of China has reduced 6.8%, The value of the import/export trade for the same period also dropped 6.4%. General  Updates
  • North America –  No major freight changes being experienced. Previous fears of cargo backlogs at the cargo terminals have been eased due the continuing operation of the supply chain and the anticipated downturn in imports from China due to order cancellations. 
    NB: On April 20, 2020, the Secretary of the Treasury and U.S. Customs and Border Protection (CBP) will be postponing for 90 calendar days the deadline for payment for the deposit of certain estimated duties, taxes, and fees for importers experiencing a significant financial hardship due to the coronavirus disease (COVID-19)
  • Europe – not dissimilar to the USA, Ports operational in most countries but processing is slow. Italy, some easing of restrictions however the worst affected areas in the North still remain in full lockdown.  Spain, lockdown still in force through to May 9 however some construction and factory workers allowed back to work.  
  • United KingdomLockdown restrictions have been continued for another 3 weeks and will be reviewed in May.  All non essential shops close – supply chain still operating but a number of businesses are working from home which is impacting cargo delivery.
  • New Zealand – New Zealand to transition to stage 3 lockdown on April 27 with a further review to take place in two weeks time. At least this will allow businesses to open back up and allow deliveries from cargo terminals to be less impacted.
  • India – Lockdown extended till May 3 – some workers in the areas of agriculture, manufacturing and construction allowed to go back to work

Economic Update                              

“The collapse in Oil prices continued to dominate markets, as the impact flowed through into the banking sector and the wider equity markets. US equities have sustained massive losses in equities, in the first two trading days of the week, as markets consider the impact on the banks of the collapse in the Oil and Gas sector.”
“Oil has taken the platform from the pandemic temporarily, but the Central issue now is the impact the virus has had on global economies. When can these economies re-open and what devastation this has caused (short/medium/long term), which can only be assessed after the storm has blown over.”

  – See the full daily update HERE // see weekly update HERE 

Shipping Update
In discussion with a number of shipping lines yesterday the general consensus, albeit one of those contacted indicated they still had strong volumes into mid /late May before fading away, was that trade volumes into Australia from China will decline during the month of May. Public holidays in China, in early May, will have an impact as well as declining orders. Some lines indicated the downturn could last into June / July and have already factored in blank sailings. Thoughts on decreases ranged from 10% thru 25%. It was also suggested that whilst we are focused on China that trade volumes from other south east Asian countries ( Philippines / Vietnam etc) along with Europe could also decline as infection rates spread and restrictions are put in place. 

In relation to our correspondence with shipping lines and stevedores on the matters of demurrage / detention, we continue to get replies that indicate an acknowledgment of the situation and where required a willingness to work with their clients on these matters, on a case by case basis at present. In addition to those already acknowledged has having replied we have since received  commentary from Hamburg Sud and Flinders Ports.  It is disappointing that the two nationally operating stevedores are yet to reply. FTA will continue to seek commentary from all those who have not answered so that industry can have some certainty on these matters moving forward.

Airfreight Update
The $110 million International Freight Assistance Mechanism (IFAM) is starting to see traction with flights already being arranged for seafood products out of Perth. FTA can also advise that from meetings with Austrade in recent days we expect an announcement later this week on the airlines and freight forwarders who will be tasks with managing the IFAM process to support the agriculture, seafood and perishable market exporters.

Source credit – Freight and Trade Alliance