The beginning of the year 2020 has not been promising and prosperous with the spread of Coronavirus all around the globe.
Every sector in the world's economy has been affected in this pandemic, shipping and trade are the most particular ones in global parlance.
A report published by the United Nations conference on trade and development on March 4, 2020, suggests that the damage done to global trade through shipping by COVID-19 will take at least second or straight to the fourth quarter to improve.
90% of the world's trade is dependent on shipping for agriculture products, medicines, and various essential products.
It started in China when containers stopped moving out from its ports when China is showing some revival rest of the world is under lockdown.
Since January Chinese economy is struggling with the downside in operations over the shipment, Port calls were declined by 17% in Shanghai and Yang Sheng.
The ratio of missed port calls increased widely since February and March around the world since China is one of the essential centers of goods movement worldwide.
Before strict restrictions in ship movements, VLCV’s were leaving ports with only 10% capacity. Containers emptied and reloaded in an average time of 3 days were taking more than two weeks, causing shortage of supplies all around the world.
Nearly empty carriers in the US-Asia Pacific trade route due to weak demand resulted in 1,99,000 tonne TEU reduced capacity. In Asia-Europe, route reduction capacity was of 1,51,000 tonne TEU.
Baltic Capesize index (BCI) has moved to negative for the first time in 30 years.
Revenues of big container ship and supply vessel companies such as Maersk and Hapag-Lloyd are Largely affected.
The situation has also made the US-China phase one trade deal uncertain in which China had to purchase Agri products worth of the US $12.5 Billion in 2020 and worth of US $19.5 Billion in 2021 from the USA.
The lockdown around the globe has hampered the reach of agricultural products in the world market. Such as shut down in Hubei Province has created a problem for Chinese Agri products such as Corn & Soybean, which are used as animal feed to reach the livestock farm.
Reportedly three most prominent Chinese posts Shanghai, Xingang & Ningbo, are stuck with refrigerated containers full of imported vegetables & fruits.
In US ports, various crew members are not allowed to enter; thus, American exporters of wheat & soybean are profoundly affected by strict regulations at Tacoma & Seattle ports.
Almost every country is under lockdown in this scenario such as Russia, South America and India are on 21 day lockdown period, Saudi Arabia, Colombia, UK, Australia which closed non-essential business and completely shut down populous states, Argentina, Belgium, Israel is under partial lockdown, EU has banned non-essential travel for 30 days. The USA is one of the top countries with the highest number of COVID-19 cases has not completely shut down as per Trump's orders.
The international chamber of shipping has also issued new COVID-19 guidelines for shipping industries in collaboration with WHO and IMO international maritime organization to safeguard the future of shipping trade around the world.
Lower demand for commodities has lowered the freight rate, and warning has started in for weak future earnings in shipping and international trade space.
These conditions are subjected to improvement in the long term after a few months of the downside when shipping worldwide would be allowed to spring back.
Tremendous efforts of government in capital addition are required to bring conditions back to normal.