“The idea that we will return to normal the moment we lift the restrictions is unlikely, even imaginative.”
Global trade watchers breathed a sigh of relief on January 15, 2020.
After two years of threats, tariffs and tweets, there was finally an armistice in the trade war between the United States and China. The agreement signed by President Trump and Chinese Vice Premier Liu He in the Oval Office did not resolve all of the trade tensions and maintained most of the $ 360 billion tariff that the Chinese goods administration had introduced. But for the first time in months, it looked like manufacturers, importers, and shippers could put two difficult years behind them.
Then came COVID-19, initially a local fault in Wuhan, China. Then it spread throughout Hubei Province, causing chaos in a concentric circle that eventually spread to the rest of China, where industrial production fell more than 13.5% in the first two months of the year. When the virus spread everywhere, chaos ensued: factories were closed. Borders closed. Supply chains broke down.
“It has had a cascading impact on the entire global economy,” said Anja Manuel, co-founder and managing partner of Rice, Hadley, Gates & Manuel LLC, an international strategic consulting firm based in Silicon Valley.
The crisis has led to a drastic decline in world trade. The World Trade Organization estimates that the trade volume will decrease by 13 to 20% in 2020. And the spinning activity could be difficult: even if China goes online again, the slowdown there could cut global exports by $ 50 billion this year. When factories are reopened, there is no guarantee that parts will be available or stocks will be empty, says Manuel, who is also on the Advisory Board of Flexport, a startup for shipping logistics. “Our supply chains are so tight and just-in-time that we throw in a couple of wrenches as we just did and it will be really difficult to get them under control.” The idea that we will return to normal the moment we lift the restrictions is unlikely, even imaginative. “
Getting to this new normal is, however, a task that a number of logistics startups take on. Companies like Flexport, which are already on the rise, Haven and Factiv see a global trade crisis as a setback, but also as an opportunity to demonstrate the value of their digital platforms in a very analog industry.