Seaborne trade could recover in the second half of the year to flat growth for 2020, ahead of a full recovery in 2021 and 2022, according to shipping insurers Lloyd’s of London.
Speaking at a webinar this morning (Thursday, 26 March) on Covid-19’s impact on the shipping industry, Lloyd’s Loading List head of consulting Christopher Pålsson said the industry could expect “somewhere between a U- and V-shaped bounce back in volumes”.
Pålsson based his optimistic projection on the recovery starting at the year’s halfway point and “pent-up demand for input material and goods to industries”.
However, if the spread of the virus has not begun abating by the end of May, there would be a “significant reduction in volumes” for 2020 as a whole, he added.
Supply chains already starting to change
Also on the webinar, Lloyd’s Loading List containers editor, James Baker said that “having a supply strategy based on one major exporting nation has been shown to be incredibly risky”.
He said there had already been a move away from reliance on China, with many production bases moving to Southeast Asia, Mexico following the restructuring of NAFTA, and Eastern Europe due to lower salaries in the region.
Cash flow crunch ‘imminent’
Lloyd’s Loading List chair of the editorial board, Janet Porter said a “cash flow crunch” was “imminent” in the industry.
She added that most shippers would get through this due to a surge of cargo from China, which is returning to normal levels of manufacturing output.
With cargo heading to Europe currently going straight into warehouses due to a fall in demand, she argued the industry should expect a slower U-shaped recovery rather than a V.
View the slides from the webinar here.