One industry that is feeling the full effects of the disruption to supply chains due to the ongoing coronavirus is shipping. Volumes of export sailings to ship Chinese made goods around the world have plummeted as the outbreak takes a deeper toll on industrial production. China is home to seven of the world’s ten busiest container ports, and it’s not just shipping leaving Chinese waters that are having major disruption. The shutdowns mean that some ships can't get into Chinese ports, because in some locations only a fraction of workers are back at work to handle goods arriving at ports. This, in turn, has a knock-on effect on cargo at storage facilities and warehouses. Still more vessels globally are sitting idle in ‘floating quarantined zones’ as countries such as Singapore and Australia refuse to allow ships that have called at Chinese ports to enter their own until the crew has been declared virus-free.
Also shipbuilding, retrofitting and repairs will take a hit. At present, there are over 200 ships either being repaired or retrofitted in China. China is also the world’s biggest shipbuilder with around 40% of the market and was set to deliver approximately 960 vessels this year. Production is slowly getting back in full swing, however, as of last week, the ratio of work resumption was at best 70% according to the China Association of the National Shipbuilding Industry (CANSI). Three major shipbuilding companies under the umbrella of China State Shipbuilding Corporation (CSSC) have begun to resume operation. But, major private shipyards New Times Shipbuilding and Yangzijiang Shipbuilding have not restarted business.
From ships to planes. We see that on Friday the US government raised its tariffs on large European aircraft to 15%, up from the 10% levy implemented last October, in the ongoing dispute over subsidies. The increase to 15% is in response to a World Trade Organization (WTO) report related to a longstanding subsidy dispute involving Airbus. That report, released in December last year, concluded that changes made to A350 and A380 development loans were insufficient to bring European governments into compliance with WTO recommendations.