What We're Reading: BDP Trendwatch Week 23

EU flag blowing in front of British flag

No-deal Brexit threat looms over pandemic-ravaged UK

The threat of a no-deal Brexit is back—and with it the risk that the U.K. economy’s shaky recovery from the coronavirus pandemic will be hobbled.

As British and European Union negotiators head into the last round of talks scheduled before a key summit this month, chances are growing that the U.K. will end the post-Brexit transition period on Dec. 31 without a free trade agreement in place—spelling turmoil for businesses.

Instead of postponing its final parting with the bloc because of the coronavirus, the U.K. government has so far ruled out any delay. That may be, critics say, because Brexiters calculate the cost of leaving without a deal will be obscured by the far more extensive damage wreaked by the virus.

Source: AJOT

 

China halts some U.S. farm imports, threatening trade deal

Chinese government officials told major state-run agricultural companies to pause purchases of some American farm goods including soybeans as Beijing evaluates the ongoing escalation of tensions with the U.S. over Hong Kong, according to people familiar with the situation.

State-owned traders Cofco and Sinograin were ordered to suspend purchases, according to one of the people, who asked not to be identified discussing a private matter. Chinese buyers have also canceled an unspecified number of U.S. pork orders, one of the people said. Private companies haven’t been told to halt imports, according to one of the people.

Source: AJOT

 

Panama Canal transits see substantial drop due to Covid-19 pandemic

The Panama Canal is feeling the effects of the Covid-19 pandemic with a substantial drop in ships transit in April and May, Panama Canal Authority (ACP) Administrator Ricaurte Vásquez, said in a virtual forum organised by a local newspaper.

"We are beginning to feel the impact of the [pandemic] situation on traffic," Vásquez.

In April, 1,022 vessels transited the waterway, 169 less than expected and in May the number of ships passing through the Canal fell to 925. In January 2020, there were 1,283 transits; in February, 1,226 and in March, 1,210.

Source: Seatrade Maritime

 

US manufacturing recovers slightly in May, demand challenges remain: ISM

U.S. manufacturing reached "the bottom of the toboggan run" in April and began to rebound in May, Timothy R. Fiore, chair of the Institute for Supply Management Manufacturing Business Survey Committee, told reporters on a call Monday. The May PMI reading came in at 43.1%, an improvement over April's 41.5% figure. However, the sector is still struggling, as a PMI below 50% indicates contraction (a figure above 50% signals expansion).

Source: Supply Chain Dive

 

Inactive container shipping fleet hits all time of 11.6% of capacity

The inactive container shipping fleet has reached an all time high of 11.6% of the fleet in capacity terms at the end of May, according to analyst Alphaliner.

The idle containership fleet stood at 2.72m teu as of 25 May, or 11.6% of capacity, due to a combination of blank sailings to mitigate the impact of lower demand from the Covid-19 pandemic and vessels taken out of service for scrubber retrofits.

Some 571,858 teu, 64 vessels, of the inactive are currently undergoing scrubber retrofits meaning that the portion of fleet take out service to manage capacity has passed the 2m teu mark.

Source: Seatrade Maritime

 

Alliances schedule 75 blankings for Q3, as hopes of peak season demand fade

2M partners Maersk and MSC are to extend the suspension of their AE2/Swan Asia-North Europe and AE20/Dragon Asia-Mediterranean loops into the peak season.

And rivals THE Alliance and Ocean Alliance have also announced service suspensions and blankings for the third quarter, including the former extending the suspension of its FE4 loop until the end of September.

This mid-term blanking strategy by the 2M, no doubt decided after feedback from major volume customers, effectively rules out the prospect of any traditional peak season demand surge this year, and confirms the end of any lingering hope of a v-shaped recovery for the trade.

Source: The Loadstar