e-Flash No. 220 - Corona Virus Impact on Trade

E-FLASH SPECIAL EDITION

IMPACT OF THE CORONA VIRUS ON TRADE: REACTIONS FROM TRADE ACTORS

FIATA - Together we are Strong!

In the wake of the Coronavirus outbreak, FIATA President, Basil Pietersen, in a communique to members noted that these are unprecedented times where in most of our living memories has the world faced such a global crisis. With the priority being to combat the global health pandemic by governments, FIATA sees a need to also focus on the business outcomes which drive our societal and personal outcomes.

While FIATA notes the resilience of its National Association affiliates and their members, FIATA’s President calls its community to unite and convey a clear and concise message to their respective National governments that the freight forwarders will be pivotal to each economy’s revival and need to be at the heart of what will be required in trade facilitation reform. “There is now more than ever a common need to fully implement the World Trade Organisation Agreement on Trade Facilitation” according Basil Pietersen, President of FIATA.

National Association are advised to meet the challenge of their members in being recognized as a “special industry category” in the discussions that will need to be held for the future rebuild.

To read FIATA’s full response please visit: https://fiata.com/media/press-releases/2020/19-march-2020.html

FIATA Secretariat Remains Open to serve its members

The FIATA Secretariat, while meeting the requirements of the Swiss government on the health and safety of staff, will continue to serve its members.

FIATA has introduced home working, with a limited presence in the Zürich office. Although service provision has been affected, service to members remains paramount for FIATA.

The Secretariat asks members to submit their enquiries by email to info@fiata.com rather than by phone. For quick responses, we encourage you to visit our website: fiata.com/home.html as a priority.

INTERNATIONAL ORGANISATIONS ON TRADE: REACTIONS TO COVID-19

IATA - Air Cargo Essential to Fight Against COVID-19

IATA and its members continue to support governments in their efforts to contain the spread of COVID-19. Air cargo is instrumental in transporting food and other products purchased online in support of quarantine and social distancing policies implemented by states.

The dramatic travel restrictions and collapse of passenger demand have severely limited cargo capacity. IATA calls on governments to take urgent measures to ensure that air cargo will be available to support the global fight against COVID-19.

To read more the full article and further media release from IATA please visit: https://www.iata.org/en/pressroom/

 IRU – Coronavirus and its impact on supply chains and mobility networks

An open letter by IRU Secretary General, Umberto de Pretto, stressed the importance to keep transport links open wherever and as long as possible in affected areas, so that people and essential goods can get to where they need to be, and to protect transport workers and companies who are the economic backbone of our societies.

Mr. de Pretto emphasised that IRU stands ready to provide the UN, its related agencies as well as all governments practical advice from the ground and guidance to ensure that, as a global community, we effectively tackle this pandemic.

To read the full open please visit: https://www.iru.org/system/files/IRU%20open%20letter%20-%20Coronavirus%20and%20its%20impact%20on%20supply%20chains%20and%20mobility%20networks.pdf

IRU has also provided update by country on national and international transport which can be found at https://www.iru.org/apps/flash-getfile-action?id=889&file=global-coronavirus-covid-19-outbreak.pdf 

WTO – DG Azevêdo Welcomes Coordinated Statement by G7 Leaders fight COVID-19

“The top priority now must be to protect the health and safety of people at risk from COVID-19,” Director-General Azevêdo added, heartened by governments' moves to introduce fiscal and monetary measures to prevent social lockdown from leading to large-scale business failure and job losses.

Alongside these measures, maintaining open trade and investment flows will be critical to protect jobs, prevent supply chain breakdown, and ensure that vital products do not become unaffordable for consumers,” he said.

To read the full release please visit: https://www.wto.org/english/news_e/news20_e/dgra_17mar20_e.htm

UIC – Working to Provide Concrete Measures Against COVID-19

In the context of COVID-19, the strength of these networks is used to give Members and partners the possibility to regularly exchange information on status and about preventive measures and procedures, especially taking into account the fact that railways – along with other means of transport – present a favourable environment for the spread of the disease.

This is why UIC has launched the COVID-19 Task Force, which held its Kick-off meeting by videoconference on 5 March 2020. Since then, and in the spirit of sharing current practices, UIC members and partner organisations have provided the Task Force with relevant information leading to the publication of the newest UIC document: Management of COVID-19: Guidance for railway stakeholders, A series of potential measures published by the International Union of Railways.

To remain updated please visit: https://uic.org/news/article/covid-19

ICAO – Urges National Governments to Implement Standards on COVID-19

States were strongly urged in the ICAO State Letter to coordinate between aviation and health authorities and to establish National Facilitation Committees that comprise all relevant groups, taking into account that cross-sector collaboration at the national level is essential. 

They were also encouraged to adhere to ICAO Annex 9 standards relevant to sustainable air freight operations and the global air cargo supply chain, and to refer to specific Annex 9 guidance and other ICAO guidance manuals concerning additional measures to be applied in a health emergency, including screening. 

For more details, please visit: https://www.icao.int/Newsroom/Pages/ICAO-urges-national-governments-to-implement-international-standards-supporting.aspx

Joint Open Letter to UN agencies from the global maritime transport industry

IMO, UNCTAD, WHO and ILO, writing on behalf of the International Chamber Shipping (ICS), advise that as the COVID-19 pandemic takes hold it is vital that all governments keep maritime trade moving by continuing to allow commercial ships access to ports worldwide and by facilitating the movement and rapid changeover of ships’ crews.

In particular, this means keeping the world’s ports open for calls by visiting commercial ships, and facilitating crew changes and the movement of ships’ crews with as few obstacles as possible.

To read the full letter please visit: http://www.ics-shipping.org/news/press-releases/view-article/2020/03/19/joint-open-letter-to-united-nations-agencies-from-the-global-maritime-transport-industry

UNCTAD - COVID-19 likely to cost economy $1 trillion during 2020

“We envisage a slowdown in the global economy to under two per cent for this year, and that will probably cost in the order of $1 trillion, compared with what people were forecasting back in September,” said Richard Kozul-Wright, Director, Division on Globalization and Development Strategies at UNCTAD.

Launching the UNCTAD report as world financial markets tumbled over concerns about supply-chain interruptions from China, and oil price uncertainty among major producers, Mr. Kozul-Wright warned that few countries were likely to be left unscathed by the outbreak’s financial ramifications.

For more details, please visit: https://news.un.org/en/story/2020/03/1059011

ECONOMIC IMPACT

Coronavirus could shrink global FDI by 5% to 15%

The coronavirus (COVID-19) outbreak could cause global foreign direct investment (FDI) to shrink by 5%-15%, according to an UNCTAD report published on 8 March. The UN trade body had projected earlier a stable level of global FDI inflows in 2020-2021 with a potential increase of 5%.

Now it warns that flows may hit their lowest levels since the 2008-2009 financial crisis, should the epidemic continue throughout the year. COVID-19’s negative impact on investments will be felt strongest in the automotive, airlines and energy industries

For more details, please visit: https://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=2299

Coronavirus wreaks havoc on retail supply chains globally

Parcel volume fell 2.4% among manufacturing customers in February 2020 compared with a year ago, according to data pulled by ShipMatrix. Health-care parcel volume dropped 2.2%, it said. And parcel volume was down 1.8% in the automotive and auto-parts sector.

Shoemaker Steve Madden, with some of the biggest exposure, has said about 73% of its goods are sourced from China. For Best Buy, it is 60%. For online furniture company Wayfair, it is about 50% of goods. Each American EagleKohl’s and Calvin Klein owner PVH source about 20% of goods from China.

For more details, please visit: https://www.cnbc.com/2020/03/16/coronavirus-wreaks-havoc-on-retail-supply-chains-globally.html

Air cargo set to take 9% demand hit due to coronavirus

Figures from the data provider show that February’s volumes were down 2% in February. However, adjusting the analyses for the fact that the Chinese New Year fell early this year (-3%) and the fact that February 2020 is a Leap Year, with an extra day over the same month a year ago (-4%), takes the overall decline to close to -9%.

CLIVE’s managing director, Niall van de Wouw, said: “It is our opinion that the near -9% decline in February is the best ‘temperature reading’ of the state of the global air cargo industry.

For more details, please visit: https://www.aircargonews.net/airlines/air-cargo-set-to-take-9-demand-hit-due-to-coronavirus/

Coronavirus outbreak has cost global value chains $50 billion in exports

The slowdown of manufacturing in China due to the coronavirus (COVID-19) outbreak is disrupting world trade and could result in a $US50 billion decrease in exports across global value chains, according to estimates published by UNCTAD on 4 March.

In February, the country’s manufacturing Purchasing Manager’s Index (PMI) – a critical production index – fell by about 22 points to 37.5, the lowest reading since 2004. Such a drop in output implies a 2% reduction in exports on an annual basis.

For more details, please visit: https://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=2297

SEA FREIGHT

Coronavirus could deliver 17 million-TEU blow to container shipping

The impact on container shipping lines from the coronavirus pandemic could total about 17 million twenty-foot equivalent units (TEUs), according to Lars Jensen, CEO of Copenhagen-based SeaIntelligence Consulting. That amounts to about 10% of global volumes in a normal world, Jensen told wealth management firm UBS.

Earlier this month Jensen wrote in an online post that the “the situation is unprecedented” but “there is one clear comparison: the financial crisis in 2008,” when global container volumes dropped by 10%. If the same contraction rate occurs this year, “this equals a decline of 17 million TEU globally for container lines” and ports and terminals could “potentially be looking at a loss of 80 million TEU of handling volume.”

For more details, please visit: https://www.freightwaves.com/news/coronavirus-could-deliver-17-million-teu-blow-to-container-shipping

Ports feel coronavirus impact on global trade

California’s Long Beach port handled $38bn in Chinese goods last year, but activity at the normally bustling harbour has more than halved from normal levels as the coronavirus outbreak spreads around the globe, according to harbour officials. 

Yangshan port in Shanghai has experienced similar declines. “The number of trucks coming in and out has dropped off by between 40-50 per cent,” said one staff member. Please use the sharing tools found via the share button at the top or side of articles. Rotterdam, Europe’s largest port and one of the world’s busiest, saw traffic from China fall 20 per cent last week from a year earlier, according to Leon Willems, a port spokesman. About 470m tonnes of goods pass through Rotterdam each year. 

For more details, please visit: https://www.ft.com/content/1071ae50-6394-11ea-b3f3-fe4680ea68b5

AIR FREIGHT

Coronavirus flight shutdowns have hit cargo capacity, says IATA

"Over 185,000 passenger flights have been cancelled since the end of January in response to government travel restrictions," said IATA chief executive Alexandre de Juniac. "With this, vital cargo capacity has disappeared when it is most urgently needed in the fight against COVID-19." While freighter aircraft have been mobilised to make up the shortfall, governments "must take urgent measures to ensure that vital supply lines remain open, efficient and effective", he said.

IATA called on governments to exclude air cargo from travel restrictions, exempt cargo crew who do not interact with the public from quarantine requirements and remove parking fees and slot restrictions to free up air cargo operations.

For more details, please visit: https://www.business-standard.com/article/economy-policy/coronavirus-flight-shutdowns-have-hit-cargo-capacity-says-iata-120031700102_1.html

Aviation shutdown threatens vital global cargo

More than $6 trillion worth of goods are transported by air every year, according to Boeing (BA). They're often high-value and perishable goods that need to be delivered at speed, and many carriers use passenger planes to move the cargo.

The industry group estimates that airlines will need up to $200 billion in government support if they are to survive the global travel shutdown caused by the coronavirus outbreak. Around 50% to 60% of all air freight travels in the hold of passenger planes, according to Zoe McLernon, policy manager at the UK's Freight Transport Association, a trade group.

Read more at https://edition.cnn.com/2020/03/17/business/air-cargo-coronavirus/index.html

RAIL AND ROAD FREIGHT

EU urges members to allow freight despite virus controls

EU urges member states (16 March) to prevent bottlenecks forming at internal frontiers and to allow freight through despite reinforced health controls during the corona virus outbreak. Several EU member states have either closed borders with other members or imposed new health screening controls, leading to fears in Brussels that efforts to coordinate a response could fail.

One idea being mooted is a separate lane for freight transport at road borders where health screening is holding up general traffic.

For more details, please visit: https://www.euractiv.com/section/economy-jobs/news/eu-urges-members-to-allow-freight-despite-virus-controls/

AAR: “Intermodal Likely to See Earliest Coronavirus Impacts”

“Intermodal, rather than other rail sectors, is likely to see the earliest impacts from the coronavirus because large amounts of intermodal traffic go to or come from ports—roughly half of U.S. intermodal is exports or imports,” said AAR Senior Vice President John T. Gray.

Gray was spot-on, as total U.S. weekly rail traffic for the week ended March 14, 2020, was 463,017 carloads and intermodal units, down 7.6% compared with the same week last year, according to figures released by the AAR. Total carloads for the week ended March 14 were 226,039 carloads, down 5.9% compared with the same week in 2019, while U.S. weekly intermodal volume was 236,978 containers and trailers, down 9.1% compared to 2019.

For more details, please visit: https://www.railwayage.com/freight/class-i/aar-intermodal-likely-to-see-earliest-coronavirus-impacts/

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Please be advised that the above are a collection of commentaries in the media to provide an overview of what industry stakeholders are reporting on the COVID-19 outbreak. The articles and information included in this newsletter are summaries as to what is happening throughout various sectors and geographies as governmental and non-governmental entities seek to address the logistical challenges imposed from the COVID-19 outbreak.

 

 

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