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Bracing for virus impact on logistics and transportation
As of the third week of January, container vessel calls at key Chinese ports dropped by 20 percent. This sluggishness is reflected in oil prices drop, crashing into a bear market.
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A deserted street is pictured in Wuhan in China's Hubei province on March 2, 2020. (AFP/NOEL CELIS)
W
ith 134 known cases as of March 16, Indonesia is not magically immune to the novel coronavirus disease (COVID-19) outbreak, which began in Wuhan, China, in January and has now been declared a pandemic by the World Health Organization, affecting over 115 countries. Even when health officials play down our vulnerabilities, the impacts of the crisis particularly on various sectors of the economy will undoubtedly be felt for a while.
As such, economists must watch for symptoms in logistics and transportation services to anticipate subsequent shocks.
Wuhan sits on the shore of the Yangtze, the world’s busiest riparian waterway. More than 80 percent of China’s river-borne traffic moves on through this great river where Wuhan alone handles close to 1.5 million containers a year.
The surrounding region also supplies important commodities; thousands of tons of coal, steel, crude oil and fertilizer. It is not hard to foresee that a prolonged supply chain disruption will tremendously impact China and her trading partners, including Indonesia.
China’s dominance in the global economy has been rising since becoming a member of the World Trade Organization in 2001. Her global share of containerized shipment grew from 10 percent in 2003 to 14 percent in 2019 whereas her global share of dry bulk commodities imports grew dramatically from 11 percent to 34 percent in the same period.
The Chinese economy imported 20 percent of global chemicals, 18 percent of gas and 16 percent of crude oil produces in 2019. A disruption in China, which is central to the global value chain, would cause serious backward and forward impacts.
Transportation, which connects producers and consumers, may offer insights about the extent of these impacts.
