It is too early to gauge the full economic and trade effects of the Coronavirus outbreak. However, shipping data, based on real-time observations of vessel positions (AIS) and information about the cargoes aboard those ships, already shows a change in the operational behaviour of container vessels and in the amount of oil products on the water. This article seeks to put these short-term changes in the context of the potential impact of the coronavirus epidemic on China’s manufacturing and trade of oil products.
Curtailed container vessels port calls in China… and worldwide
Container ship visits to Chinese ports, measured both in number of vessels scheduled to call and their cumulative capacity in Twenty-foot-Equivalent Units (TEU) plunged in late January and early February. At the same time, the ratio of missed port calls (i.e. scheduled vessel calls that do not occur) has risen sharply to levels usually seen in late February and March.
Typically, vessel operating companies reduce capacity in the weeks following the two-week Lunar New Year vacation in China. The number of missed port calls – shipping companies bypass a port because of a lack of volume and go straight to the next port in their scheduled rotation – rise during that period. Ahead of the holiday, shippers usually pre-order goods ahead of the drop in Chinese output, which helps minimize the number of missed port calls.
This year, the traffic slowdown, with both fewer scheduled calls and more cancelled ones, is occurring much earlier. This comes even though many airlines have announced cancelling flight service, reducing air cargo capacity and forcing manufacturers to switch to waterborne transportation even for higher-value and more time-sensitive cargo.
More significantly, the slowdown in port calls is occurring worldwide, not just in China. Shipping companies have been reducing scheduled capacity since about August of 2018 on most trade lanes as trade wars slow global demand for cargo capacity. In the second half of January and early February, this drop accelerated significantly. The centrality of China to the movement of goods around the world explains this: if Chinese ports are not loading or discharging containers, there is no reason to stop at the port where the shipment is supposed to go to or come from. The move towards bigger container ships is another important factor at play: a missed port call now has a more profound impact on available capacity.
Increased amount of oil products on the water
China also plays a crucial role in terms of global oil products trade, as an important source of demand for crude oil, and of supply of refined products. Crude oil is moved under long-term arrangements, via either annual contracts or bought months in advance. As expected, the flow of this commodity currently seems unaffected. However, signs of stress are starting to appear in the downstream sector of the oil value chain.
One way to quickly identify changes in world demand for energy products is to measure the amount of a commodity that is in transit aboard ships. Reduced demand will lead producers to ship fewer cargoes, reducing the amount of oil on the water, and vice versa. Using this metric, jet fuel emerges as the first oil product (transportation fuel) showing signs of a slowdown following the coronavirus outbreak.
Since the beginning of the year, jet fuel in transit has declined by 2% from the same period in 2019. Measured since 10 January 2020, when the extent of the epidemic started to become more widely known, the drop has been 5% (see Figure 3). This drop must be seen against the backdrop of steady rises in jet fuel demand over the last five years, representing the fastest growing segment of the petroleum product market, underpinned by air travel demand.
Источник: 04 March 2020. Written by: Abudi Zein (в сокращении) Article No. 48 [UNCTAD Transport and Trade Facilitation Newsletter N°85 - First Quarter 2020]
https://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=2296&fbclid=IwAR2ld5_vENln5rD1XBDzBfOsGbfSizNnFJHOJsunZLT8TTM8Qz5mJBrsBEY