China’s economic growth is expected to slow to 4.5% in the first quarter of 2020 – the slowest pace since the financial crisis.
Factory shutdowns are slowing the flow of products and parts from China, affecting companies around the world, including Apple and Nissan.
Businesses are dealing with lost revenue and disrupted supply chains due to China’s factory shutdowns, tens of millions of people remaining in lockdown in dozens of cities and other countries extending travel restrictions.
Disruption to commerce
The shortage of products and parts from China is affecting companies around the world, as factories delayed opening after the Lunar New Year and workers stayed home to help reduce the spread of the virus. Companies have to get permission from government to start working. Many business have directed their employees to work from home.
Cancellation of flights to China
Major airlines have suspended their flights to China in the wake of Corona virus outbreak. There is a distinct lack of desire to travel to China or to other Asian destinations currently , because of the uncertainty prevailing from a health point of view. This will drive down airlines’ revenue and deprive other segments of the travel industry, including hotels and retailers.
Shipments from China
Most of the world’s goods are shipped by sea but the marine shipping industry is set to take a hit as demand drops and countries put a stringent measures against the corona virus in place. Countries like Singapore and Australia have refused to allow any ships that have been at a Chinese port in the preceding two weeks into their ports, whereas other countries have put in place severe screening measures.
Demand and Supply
Chinese manufacturing, exports and cargo capacity are all down as a result of the outbreak. When production returns to full capacity, there will be a rush in demand. Carriers are expected to apply higher freight rate level once demand out weights supply. It is likely that factories, airlines and other transportation system will increase their tariff to recover the loss they suffered during the outbreak of the Corona virus. We can all expect price avalanche on all consumable items.
