The world is a very different place to when the last edition of Drewry’s Container Forecaster report was published in December. The only certainty is supply and demand volatility.
The outbreak of coronavirus (COVID-19) has laid bare the fragility of humankind and the supply chains that help us to live as we have become accustomed. Each passing day brings more grim new statistics that make it clear that our early assessment of the crisis and its likely impact on the container shipping market was too optimistic.
What started out as an isolated supply shock has rapidly mutated into a global demand crisis as governments across the world are implementing social distancing measures (to varying degrees) in a bid to contain the virus. China is nearing full production activity, but its position as the factory of the world won’t mean much if its trading partners are not making purchases while in lock-down. Production outside China is also starting to be hit.
It is too early to say precisely how COVID-19 will impact the container shipping world and how it will measure against the container market’s nadir of 2009 due to the uncertainty surrounding the virus.
That will only become possible when these key questions can be answered:
- Will the virus spread with the same force in every geographical region?
- When will the virus be contained so that normal social and economic activity can be resumed?
- Will government rescue measures be sufficient to prevent a permanent scarring of the global economy?
Regrettably, Drewry has no special insight into these questions that have thus far eluded experts in the fields of epidemiology and economics.
Instead, the approach taken in the Container Forecaster report was to outline three potential scenarios and their implications for the market. We know that our forecasts won’t be perfect, but in outlying the broad trends it is hoped that it will help all stakeholders prepare as best they can.