Thursday, February 20, 2020 /07:20
PM / By FDC / Header Image Credit: Pinterest
The Xin Wang Hong Kong Cafe, overlooking the west runway at Singapore's Changi international airport, seems like a fitting place to write a Trade Secrets briefing as China's coronavirus crisis rumbles on.
For one thing, it is quieter than most libraries, even during Monday lunch hour at what is usually one of the world's busiest international airports. So too are the nearby Terminal 3 departure and arrival halls. It is all a reminder of one of the most remarkable aspects of the coronavirus epidemic and the subject of today's post - the drastic impact the disease outbreak has had on what are usually some of the world's busiest aviation and maritime trade corridors connecting Singapore, Hong Kong and Taiwan.
Outbreak is hitting some of the world's busiest aviation and maritime trade corridors.
South China Sea or Bermuda Triangle?
Even someone blissfully unaware that a highly contagious respiratory disease had been spreading across China and beyond since mid-January would realize something was amiss upon entering the Xin Wang cafÃ©. Aside from the almost complete absence of patrons, those few that do arrive are required to clean their hands with an antiseptic gel. And while at most airports you do not normally encounter the phrase "your safety is our priority" until boarding an aircraft, it appears at every table alongside the assurance that "the table has been sanitized before each dining session".
Outside on Changi's west runway, planes arrive at seemingly busy two-minute intervals. But the sparsely populated terminal reflects the fact that many of those planes are almost completely empty, especially if they are arriving from Hong Kong or other cities in southern China's Pearl River delta, such as Shenzhen or Guangzhou. There is simply no point booking business-class seats on these routes any more. On two recent flights between Hong Kong and Singapore, your Trade Secrets correspondent and perhaps 20 other passengers shared the entire economy-class cabin. Flights between Hong Kong and Taiwan 13 are even more sparsely populated, after the latter banned most visitors from the former for fear that they would be carrying more than just a few bags. Coronavirus infections have been slowly but steadily climbing in both Singapore (77 cases) and Hong Kong (61 cases).
It is not inconceivable that, should the virus take off in either or both cities over the coming weeks that they too might move to cut off visitors from each other. The importance of Singapore, southern China and Taiwan to global supply chains and international finance is so great that it is hard - in the event that these regions are soon forced to completely sever aviation links with each other - to think of a reasonable parallel in North America or Western Europe. But one might imagine what the US would look like if the flow of people, services and air cargo between New York, Washington and Chicago were to brought to an abrupt halt by, say, a pandemic emanating from the heart of the People's Republic of China.
As it is in the air, so it is at sea. Before touching down at Changi, aircraft fly low over one of the most remarkable maritime vistas in the world: the hundreds upon hundreds of container ships, oil tankers and bulk carriers anchored off the city state's southern shore, an anchorage also known as the "Singapore Roads". The Singapore Roads, as one veteran Hong Kong shipping executive puts it, are by far "the layman's easiest optic on the state of the shipping industry". The more vessels moored there awaiting charters, noted Tim Huxley, chairman of Mandarin Shipping, the more sluggish the global economy. Clear-cut statistics for the coronavirus epidemic's impact on regional aviation and shipping services will not be clear until mid-March when figures for the first two months of the year are available. January figures released over recent weeks give only a hint of the real damage being done, as the epidemic did not erupt in full force until the end of last month.
The variable Chinese lunar New Year holiday, which fell in January this year but February last year, also muddies available year-on-year comparisons. But it is not hard to imagine how awful those statistics are likely to be when they are finally available, Mr Huxley notes, when one considers that China accounts for about 25 per cent and 35 per cent of global crude and dry-bulk imports respectively, as well as 30 per cent of total container exports. This crisis," he added, "has made people so much more conscious of just how fragile global supply chains are." 14 Over recent weeks there have been at least 31 "blank sailings" - sailor-speak for cancelled services - from China to either the US or Europe.
And aside from the inevitable year-on-year falls in air passenger, air cargo and maritime cargo, there are other impacts from the epidemic looming. These include an estimated 200 vessels stuck in Chinese shipyards awaiting installation of new exhaust "scrubbers" that they require to comply with stricter environmental emissions standards - and the approximately 860 new ships China's boat builders are supposed to deliver this year.
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