Mar. 26, 2020

COVID-19: China Trade Recovery Index—March 26

Phil Levy
Chief Economist, Flexport

Ready to Get Started?

Flexport makes shipping your cargo transparent, reliable, and affordable

Supply Shock Becomes Demand Shock as China Comes Back Online

For the better part of two months, the question has been when China’s economy would return to functioning fully and be able to meet the world’s demand. Yet now, we’re seeing the question may be less about China’s ability to supply, and more about the drop in global demand. As countries restrict movement of people internally and order retail establishments closed, the need to supply those retail businesses is on the decline.

Flexport’s COVID-19 China Trade Recovery Index provides a preliminary look at the air and ocean shipments of its customers, originating in China and being sent to the rest of the world. It measures not the correlates of supply chain activity, but the ultimate result of that activity—shipped products. Based on data through Tuesday, March 17, the slow recovery we described last week continues.

The index measures shipments relative to the normal low point of the week after Chinese New Year (CNY). In the chart above, the shipment volume at that date (CNY+1) is normalized to equal 100 and shipments for 2018 and 2019 are offered for comparison. Shipments a week ago (index value 229 in week CNY+6) had risen 13% from the week before. This week, shipments grew by an additional 18% (index value 271 in week CNY+7). That means that shipments are now almost 3X the level right after CNY, as compared with 4.6X in 2018 and 2019.

The additional measured activity in week CNY+7 reflects a boost in airfreight and a decline in ocean shipping, despite the increase in airfreight costs due to elimination of many passenger flights. Airfreight is now being used to move urgently needed supplies, such as personal protective equipment for hospital workers, or to replace depleted inventories. The ocean shipping decline is likely linked to overstocked warehouses in countries that import, rather than lingering production issues in China.

Check back next week for the latest report on the China Trade Recovery Index. In the meantime, to learn more about capacity and carrier increases or decreases, check our weekly Freight Market Update.

Share the Article

More From Flexport

arrowImagearrowImage

Ready to Get Started?

Sign up for a Flexport account or ask to see our platform in action.

Sign Up for Freight Market Updates

Get weekly insights into all things freight, delivered right to your inbox.

I agree to the storing and processing of my personal data by Flexport as described in the Terms of Service and Privacy Policy.
LEGAL

Customs brokerage services are provided by Flexport’s wholly-owned subsidiary, Flexport Customs LLC, a licensed customs brokerage with a national permit. International ocean freight forwarding services are provided by Flexport International LLC, a licensed Ocean Transportation Intermediary FMC# 025219NF. U.S. trucking services are provided by Flexport International, LLC, a FMCSA licensed property broker USDOT #2594279 and MC #906604-B. All transactions are subject to Flexport’s standard terms and conditions, available at www.flexport.com/terms 沪ICP备16041494号

Copyright © 2020 Flexport Inc.

Terms of Use/Privacy Policy