The effects of the coronavirus outbreak continued to reverberate across the global supply chain this week, as China took its first but slow steps back to work and uncertainty persists throughout the industry.
Freight rates across lanes fell moderately as demand remains minimal. A further discounting of rates may be unlikely as dropping prices can’t attract shipments that simply aren’t there - the ships that did sail this week reported up to 90% unused capacity.
The partial resumption of work and beginnings of production are generating some initial signs of hope, though. Freightos.com’s marketplace data saw a 2% uptick in China’s share of searches for freight bookings out of Southeast Asia for the first time since the outbreak, indicating that some shippers have or are anticipating orders that will be ready soon (chart below)
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But aside from areas still officially shutdown, the resumption of work has remained slow even in the cities and provinces that are back from the extended holiday. Some factories are waiting to reopen out of fear that the close quarters in factories and dormitories could lead to more infections.
Only about 10-20% of factories have received permits to reopen so far and though transportation within most provinces is back to normal, travel between provinces is still limited, which will also add to the slow recovery.
Eytan Buchman, CMO, Freightos
