Widespread shutdowns implemented by China for the past month or so are expected to take their toll on German ports.
With more than 80,000 cases and 3,000 deaths, China has been the country worst affected by the coronavirus. Up until the outbreak the Chinese sought to maintain growth above 6 per cent in order to avoid social unrest and job losses.
Now the second-largest economy in the world faces its first quarter of zero or negative growth since the turbulent days of chairman Mao and the cultural revolution.
The economic shock of the outbreak has now been felt across the world, with falling Chinese demand for oil triggering the current Saudi-Russia price war and witnessing their largest one-day drops since the global financial crisis.
The shipping industry has not escaped unscathed. Indeed, according to the shipping data service Alphaliner, more tonnage of container ships is currently idle around the globe now than in 2008.
With deliveries from China to Germany taking six weeks, the ports of Europe’s largest economy are only now feeling the full effect of the disruption. As China is Germany’s biggest trading partner, the effect of the slowdown is expected to be significant.
Hamburg, the country’s main port, is bracing itself for impact. Last year more than 25 per cent of the 9.3 million 20ft equivalent units (TEU) of it traded either went to or came from China.
The world’s leading shipping firms have already begun to suffer as a result of the global crisis. Maersk (OMX) and Hapag-Lloyd (HLAG) have fallen 31.4 and 16.9 per cent respectively in the past month alone.
Even before the coronavirus outbreak the Baltic Dry index had slumped as the global shipping sector struggled to cope with the protracted US-China trade war and global economic slowdown.
While Chinese president Xi Jinping sought to signal in his first trip to the virus’s epicentre in Wuhan that the country is returning to normal, Germany is braced for a recession.
German government officials are expected to assemble a significant stimulus package in order to bolster the export-dependent economy. That chancellor Angela Merkel signalled in a conference this week the possibility that the government could break its longstanding zero deficit rule indicates the gravity of the situation facing the country.