Economy

COVID-19: Global trade via shipping badly affected, says UNCTAD

Situation unlikely to improve before second or even fourth quarter of 2020

 
By DTE Staff
Last Updated: Thursday 05 March 2020
Photo: Pixabay

Trade across the globe through shipping has been badly affected due to the novel coronavirus (COVID-19) outbreak, a report by the United Nations Conference on Trade and Development said on March 4, 2020.

The situation was not expected to improve untill the second quarter and it may even take until the fourth quarter, it added.

“Even after the spread subsides and China starts to return to normal business activity, it will take a long time to unwind the stresses inflicted on the world’s trading system. A return to medium and long-term trends in shipping and trade is unlikely before the second half or even fourth quarter of 2020,” the report read.

It reached its conclusions on the basis of real-time observations of vessel positions and information about the cargoes aboard ships.

The number of container ships visiting Chinese ports plunged in late January and early February, the report said. This was based on the number of vessels scheduled to call and their cumulative capacity in Twenty-foot-Equivalent Units.

At the same time, the ratio of missed port calls (When a vessel does not reach a port as scheduled) rose sharply to levels usually seen in late February and March.  

This happened even though many airlines had cancelled flight services after the outbreak grew in China, reducing air cargo capacity.

The report added that cancellation of such calls at ports by ships was happening not just in China but across the world since the country was so central to the movement of goods worldwide.

  China container port traffic: ratio of missed port calls

 

 

Source: UNCTAD Report / ClipperData

Petroleum and its products

The effects of COVID-19 on the movement of crude oil and its products was also beginning to be felt, the report said.

“Crude oil is moved under long-term arrangements, via either annual contracts or bought months in advance. As expected, the flow of this commodity currently seems unaffected. However, signs of stress are starting to appear in the downstream sector of the oil value chain,” it read.

One of the prime examples of this was jet fuel, used in aircraft. The report noted that the amount of jet fuel being transported on board ships since January 10, 2020, when the extent of the outbreak began to become better known, was five per cent.

Another crude oil product to be affected was diesel, the report found. The amount of diesel on board ships that are idle and not moving during January and February has soared, pointing to a reduction in its demand due to a lack of industrial activity on-land.

The prices of diesel were supposed to rise given that the International Maritime Organization had introduced a cap on the emission of sulphur in the beginning of 2020. But even after this came into force, prices have not risen. This again points to the effect of COVID-19, the report said.

Lastly, there had been a significant slowdown in refining activity in China, especially in the north, the report said. This was based on data about the amount of crude oil imports and crude oil in storage onshore in China.

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