Export levels continue to rise, cautiously optimistic about future development
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Export levels continue to rise, cautiously optimistic about future development

Views: 0     Author: Site Editor     Publish Time: 2022-04-04      Origin: Site

While supply chain conditions are still far worse than they were in the pre-COVID-19 period, constraints have begun to partially ease. That's because some Asian economies, key in global supply chains, have eased coronavirus measures and reopened to the outside world.

Economies in the Asia-Pacific region are starting to rebound after setbacks in the third quarter as factories reopen, according to the December 2021 DHL Ocean Shipping Market Update. As the Delta outbreak subsided, manufacturing output in the Asia-Pacific region began to pick up, driven by accelerating economic growth in Indonesia, Thailand and India.

China's Caixin/Markit Purchasing Managers' Index (PMI) rose to 50.6 in November last year, a major supplier of products carried on container shipping lines' main trade routes, indicating a return to growth after falling to 50.0 in September last year due to austerity. That's partly because power shortages have eased significantly after many factories experienced power outages earlier last year.

Ongoing business challenges

Of course, it will not all be smooth sailing. Carriers are still setting blank sailings, keeping schedules intact by withdrawing routes. For operational reasons, some carriers have also adopted a less disruptive approach to port hopping, i.e. skipping specific ports in the route.

Sea-Intelligence shipping consultancy said that in October last year, global schedule reliability improved again, but the improvement was not large, and for the whole year, it remained stable in the range of 34-40%. Notably, reliability levels in October 2021 decreased by 18 percentage points compared to October 2020, while the average delay in cargo ship arrivals only slightly decreased to 7.34 days.

In October 2021, Maersk was again the most reliable of the top 14 carriers, with a schedule stability of 46.4%, followed by Hamburg Süd (38.1% schedule stability).

Worryingly, there are increasing schedule gaps and port congestion in the Asian region. These conditions further disrupted shipping order, causing a large number of ships to jam at the transshipment hub.

Moreover, considering that demand is expected to remain strong near the Spring Festival, global port congestion is still a major problem.

In terms of possible bottlenecks, feeder vessel operators were forced to gradually reduce their operations in the Pearl River Delta in South China from December last year to mid-February this year due to China's strict quarantine protocols for crew members.

Mitigation of Supply Chain Constraints

Even so, there are signs that the economy is slowly picking up. In November, the JPMorgan Global Manufacturing Purchasing Managers Index indicated that business conditions had improved for the 17th straight month.

JPMorgan Chase also said that the number of new global orders rose again in November last year, while the growth rate of new export orders in November was higher than that in October.

Analysis by investment bank Nomura further confirms this. At the beginning of December last year, Nomura Securities said that the gradual increase in production capacity of factories after the new crown pneumonia epidemic will help overcome bottlenecks in the supply chain. It also said that the Supplier Delivery Time Index (SDTi) rose from 42.9 in October to 43.8 in November, including Vietnam and China. The increase is particularly significant.

The turnaround in Vietnam is particularly striking. Vietnam ranks 38th out of 169 countries in the DHL Global Connectivity Index. Vietnam's GDP fell 6.1% due to strict social distancing measures, but its exports started to rebound. Vietnam's Ministry of Industry and Trade currently expects exports to grow by 10 percent this year.

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