Container Markets Braced for Devastating Demand Downturn

March 30, 2020

“The near-term outlook for the containership industry has deteriorated rapidly following the spread of COVID-19 cases worldwide and subsequent efforts to limit the number of deaths and cases,” notes Maritime Strategies International (MSI). “After moving past the worst of the disruption to Chinese manufacturing output, containerised trade flows will very soon plummet as quarantine measures choke off consumer demand, exchange rates weaken and cash-constrained businesses worldwide cut back on purchases.”

Even though export availability out of China continues to improve, Maritime Strategies International now views the downturn in demand as equivalent – or worse – than during the global financial crisis of 2008-09.

“The world economy has entered recession,” claims the analyst’s latest report. “MSI are working to forecast the full extent of the demand-side downturn across trade-lanes, but there seems little doubt that containerised trade will shrink in 2020, with near-term rates of decline potentially approximating – or even exceeding – those seen during the financial crisis.”

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Source: Lloyd’s Loading List

How Supply Chains Jumped From Business School and Into Our Lives

March 30, 2020

The past century of global economic integration through trade has been a steady march of progress, from trucks to pallets, from container ships to computers, from Asia’s manufacturing rise to artificial intelligence — all spinning a web of commerce so intricate that it spawned a new science.

Supply chains. They’re not just for mid-level managers and business schools anymore.

The Covid-19 pandemic is playing out in ways that even the most rigorous corporate stress test would have likely missed in its scope and severity. The closure for nearly two months of much of China’s economy. Weeks, perhaps months, of idled factories and millions pushed into unemployment in the U.S. and Europe. Looming humanitarian crises in poorer countries from India to Venezuela. The weight of human suffering on confidence as the death toll rises.

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Source: Bloomberg

Workers Critical to World’s Food Supply Are Starting to Fall Ill

March 30, 2020

Poultry giant Sanderson Farms Inc. on March 23 reported the first case of a worker at a major U.S. meat producer testing positive for coronavirus. The employee and six more from the McComb, Mississippi, plant were sent home to self-quarantine, with pay, but operations continued as normal.

A few days later Smithfield Foods Inc., the world’s biggest pork producer, confirmed a positive case at its Sioux Falls, South Dakota, facility. In all likelihood, the numbers will keep going up at meat plants, farms, warehouses and packaging factories across the globe.

The infections speak to a growing threat to the world’s food supplies. Massive operations where workers pick berries together, cut meat side-by-side on a production line or load warehouse trucks in sometimes close proximity risk slowing down. Some facilities may have to shutter for cleaning and worker quarantines. Produce could end up rotting in fields if there aren’t enough healthy workers.

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Source: MH&L News

Ocean Container Volumes are About to Fall Off a Cliff

March 30, 2020

The new market outlook of U.K.-based consultancy Maritime Strategies International (MSI) reads like a Stephen King novel geared toward container-line executives. It’s not exactly feel-good reading for cargo shippers either. Cheap freight rates are only attractive if they don’t trigger another Hanjin Shipping-style bankruptcy.

“The near-term outlook for the container-ship industry has deteriorated rapidly following the spread of COVID-19 cases worldwide and subsequent efforts to limit the number of deaths and cases,” warned MSI in its monthly outlook released Thursday.

“There seems little doubt that containerized trade will shrink in 2020, with near-term rates of decline potentially approximating — or even exceeding — those seen during the financial crisis,” it said.

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Source: American Shipper

Change of Dynamic: Air Freight Demand Now ‘The Reverse of Three Weeks Ago’

March 30, 2020

Air freight demand is expected to plummet as consumers in Europe and the US are forced to stop buying by shops closing.

The automotive industry has already stopped requesting components as plants have closed; retail has canceled orders – Bangladesh alone faces cuts in orders for apparel worth $2.67bn.

“Shopping is just not a priority,” said one forwarder. “The only real air freight demand now is medical equipment and some urgent products.

“Just-in-time may be changed forever.

“There is also no cashflow.”

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Source: The Load Star