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Perishable shipments into China slowly recovering while electronics and automobiles take a hit
After the threat of Corona Virus recedes, trade activities in China begin to pick up pace as imports of perishables rise. Perishables exporters from the US are now gearing for more exports of agriculture products, poultry and seafood. China has started announcing tariff exclusions and reductions for imports of certain US agricultural products. This move by China comes as an effort to execute its agriculture-related commitments under the Phase One trade agreement with the US, which came into effect on 14 February 2020. Perishable exports from countries like Chile, Canada and Peru has also continue to gain pace. Although, market experts still warn forwarders to not to anticipate a quick surge. As precautions to limit the spread of the epidemic, bottlenecks, capacity crunch and heavy traffic on Chinese route won’t be settled easily in coming months.
On the other hand, the consumer electronics and automobile industry has been severely affected by extended shutdown of Chinese factories and transportation services. The Corona outbreak has heavily impacted production and supply of smart phones and other products as it is a highly labour intensive industry. As a result, forwarders around the globe have been struggling with cashflow constraints. The automobile industry is facing 14% decline in the 1st quarter due to crippled airline service in China. Some of the air freighters have extended their flight cancellations until the end of March.
The brunt of the epidemic is majorly felt in Indian freight forwarding sector due to its dependency on Chinese electronic and automobile components as well as finished goods. India’s exports to China have also reduced. Decreased revenue for over a month due to decreased cargo from China has rendered some of the small and medium forwarders helpless over their cash inflow. Excessive competition in the sector has also led to lower profit margin.