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Global supply chains up for review

Logistics and transportation of Container Cargo ship and Cargo plane with working crane bridge in shipyard at sunrise, logistic import export and transport industry background
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Once the dust has settled following the COVID-19 outbreak, whenever that may be, we can expect to see a slowing down of globalization alongside a review of global supply chains.

This is the latest analysis from BIMCO as it published a revised statement on its 2020 forecast for main shipping markets.

The crisis has already exposed several vulnerabilities to the supply chains we know today, the international shipping association said.

BIMCO notes that demand is for container shipping is to be negatively impacted for a full year. We have already seen A.P. Møller – Mærsk suspend its 20202 full year guidance considering this and other negative impacts from the COVID-19 outbreak.

Freight rates are likely to be below that of 2019, according to the BIMCO analysis.

Moreover, BIMCO notes that given the nature of this crisis, we do not expect a contraction of demand to proportions similar to that of the 2008 financial crisis, which saw demand slip to +3.4% in 2008 and contract by 9.5% in 2009, from an average demand growth of 9.7% in 1997-2007.

The origin of the COVID-19 crisis is not financially and avoiding a huge increase in unemployment is a main objective for many stimulus plans.

While China may be turning the corner on its coronavirus catastrophe the country is still in recovery. Productivity currently sits at around 60-75% of capacity as of 18 March, this despite truck driver supposedly fully recovered.

In a statement from Hapag-Lloyd, CEO Rolf Habben Jansen, commented on the fast recovery of Chinese and Asian markets but wanted that now other continents are impacted the effects will be “significant”.

He also noted that “2020 will be a very unusual year”.

While lifting the lid on the Asian lockdown will lift volumes as the backlog is lifted. The idle fleet will decline as the number of cancelled sailings are reduced.

However, new export orders may not hold up as Europe and North America enter lockdown. BIMCO notes that demand will “evaporate” because of the Western lockdown.

BIMCO does not expect a demand boost to appear when daily lives return. We will merely see a gradual recovery to normal freight volumes. For the regular network logistics, BIMCO expects 2020 to be massively disrupted due to these out-of-sync impacts to export centres and import centres across the globe.

This is the latest analysis from BIMCO as it published a revised statement on its 2020 forecast for main shipping markets.

The crisis has already exposed several vulnerabilities to the supply chains we know today, the international shipping association said.

BIMCO notes that demand is for container shipping is to be negatively impacted for a full year. We have already seen A.P. Møller – Mærsk suspend its 20202 full year guidance considering this and other negative impacts from the COVID-19 outbreak.

Freight rates are likely to be below that of 2019, according to the BIMCO analysis.

Moreover, BIMCO notes that given the nature of this crisis, we do not expect a contraction of demand to proportions similar to that of the 2008 financial crisis, which saw demand slip to +3.4% in 2008 and contract by 9.5% in 2009, from an average demand growth of 9.7% in 1997-2007.

The origin of the COVID-19 crisis is not financially and avoiding a huge increase in unemployment is a main objective for many stimulus plans.

While China may be turning the corner on its coronavirus catastrophe the country is still in recovery. Productivity currently sits at around 60-75% of capacity as of 18 March, this despite truck driver supposedly fully recovered.

While lifting the lid on the Asian lockdown will lift volumes as the backlog is lifted. The idle fleet will decline as the number of cancelled sailings are reduced.

However, new export orders may not hold up as Europe and North America enter lockdown. BIMCO notes that demand will “evaporate” because of the Western lockdown.

BIMCO does not expect a demand boost to appear when daily lives return. We will merely see a gradual recovery to normal freight volumes. For the regular network logistics, BIMCO expects 2020 to be massively disrupted due to these out-of-sync impacts to export centres and import centres across the globe.

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