The World of Trade These Days
The COVID-19 pandemic is inflicting high and rising human costs worldwide, with over three million of people infected by the virus and over 211,000 deaths, we at the ECA are profoundly saddened by the loss of life that has occurred around the world. This health crisis has quickly evolved to become an economic crisis, with millions of people around the globe losing their jobs and income. Concerning projections from both the IMF and the WTO who have predicted the global economy will contract –3% and that international trade will fall sharply in 2020 respectively. In an ‘optimistic’ scenario, WTO economists predict the volume of global merchandise trade will fall by a staggering 13% compared to 2019.
Business - not as usual. Let’s talk Australia
It’s not all bad news: Where we are at and where we go from here
- Freight and logistics – difficulties with availability, cancellation of sea freight routes and increased freight costs that further reduce already thin margins
- Supply chain issues – with problems with sourcing, challenges managing the just-in-time system, cancellation of contracts and constant delays
- Export documentation – the need to digitise all certificates and the many export-related documents have posed challenges, translating in goods and cargo being held and creating all sorts of issues cross borders which are hard to solve remotely
- Keeping trade lanes open and promoting avenues for freer trade
- Keep multilateral collaboration and coordination between countries as the current restrictions ease, and communicate those measures to the trade community
- Extend Government support in the freight and logistics area, to other exporters beyond perishables and expand the discussions to include sea freight
- Further explore the needs of the services export sector (e.g. Education and VET) which have less visibility in the overall trade landscape.
- Take advantage of the current Government initiatives and seek support from industry bodies and relevant organisations to bring visibility to the issues that currently affect Australian exporter
- Start to rethink the geographic diversity of your supply chains and explore alternatives for sourcing, if available
- Regroup to have a clear strategy to re-enter markets where recovery is on the horizon and where demand will be increasing.
In the midst of the current trade landscape, one thing is clear: there will be a before and after for the global economy and the Australian economy and the trade community will certainly have to adapt. It is important for the trade community to develop resilience and work together through this crisis as we start to slowly prepare for a recovery which will surely come.