Coronavirus: global trade braces for ‘tidal wave’ ahead, as shutdown batters supply chains

A series of data points show where world trade is going, and the picture for air and sea freight is not a pretty one

Supply and demand crises are coalescing on the high seas, as more countries shut their borders

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Demand for shipped goods is forecast to plunge as countries around the world close their borders due to coronavirus. Photo: Reuters

Published: 12:30pm, 3 Apr 2020Updated: 11:52pm, 3 Apr 2020

On Tuesday, the Port of Wuhan, a vital cog in China’s heavy industry supply chains, reopened for business after more than two months of being locked-down at the centre of China’s initial coronavirus outbreak.

In the same week, Ethiopia closed its land borders, Myanmar cancelled all commercial flights and South Africa restricted cargo movements to non-essential goods, joining the United States, Canada, Mexico and most of Europe in deploying draconian containment strategies aimed at stopping the virus’ spread.

It was a case of one door opening and 50 slamming shut. This winding down of international connectivity is set to paralyse global trade, the effects of which can already be viewed through a number of early indicators, and advance governmental statistics.

Air freight prices have spiked on routes out of China, by more than 200 per cent to destinations in Southeast Asia as factories desperately try to source components amid fears of further lockdowns, but also by more than 100 per cent to Europe and the United States, according to TAC Index, which monitors air freight rates.

The cost of air freight from China has spiked due to the coronavirus outbreak.

With barely any airlines flying out of China any more, it is more expensive to book cargo space and this will continue as the number of carriers dwindle and trade collapses along with it. But with much of the valuable space on these planes taken by vital medical equipment, there is vanishing room for anything else.