How the COVID-19 Pandemic Is Reshaping the Trade Landscape

The problem with the COVID-19 pandemic lies in the fact that it affects more than just the health of people. By restricting traffic, it is also actively limiting the export-import situation on a global scale. Trade, in general, is put in jeopardy because it directly affects transportation. Economic uncertainty is both a reason and a symptom of this problem. When the situation looks uncertain, people tend to stockpile funds instead of investing them. Even when they are buying, they prefer to invest in commodity goods rather than… well, trade. So, here’s how this could affect global trade.

1. International tensions

Not every part of the globe is equally affected, which means that some areas pose a higher level of risk for the spread of the virus. The thing is that this can cause a higher level of international tensions which directly affects international trade. Even though different studies vary in opinions regarding how long the virus can last on a hard surface, the means of transportation always include human contact. This involves crew being transported across the border, which is problematic, to begin with.

2. It depends on the goods in question

The next thing worth taking into consideration is the matter of the goods in question. Namely, you need to understand the fact that goods like food and basic supplies need to move unrestrictedly. The demand for these goods has even increased in these trying times, which is why various regions are rapidly introducing policies to normalize the trade in this field. Other than this, health-related supplies, as well as supplies required for hygiene are also amongst the most important out there. This too may require a certain volume before it could reinvigorate the world of trade, as it is.

3. The logistics

The matter of logistics and safe transportation is also put under a question mark. There’s little doubt that the volume of maritime transportation has dropped severely. Under these circumstances, finding a region whose ports can still satisfy the demand of the market and a trusted carrying company may be paramount. This is why the demand for 3PL in Australia has risen so drastically in the past several months. Third-party logistics can be used in order to boost the level of professionalism, as well as collective safety amidst the pandemic. Urgent requests and the efficiency of your supply chain are simply unparalleled.

4. The future

Some regions are struck harder than the others. The best example of this is Italy, where the impact of coronavirus on exports has dropped by 16.3% compared to the previous year. The problem with the pandemic lies in the fact that the virus might not go away in the next several months. This would mean that the problem might project itself in the future, as well. Next year it is projected that it may rise to 10.2%. This is due to the adjustability of the market and government regulations aimed to make improvements in this field. 

5. Raw materials trade

One more field that is getting heavily affected by the current situation is the metals industry. The problem with this lies in the fact that China manufactures about 20% of products traded on the global supply chain. Seeing as to how the outbreak started in China and this was one of the first countries to start introducing the quarantine rules, things have rapidly started to escalate in the wrong direction. This year alone, the metal industry in the EU is expected to lose $1 billion due to the reduction of Chinese exports. Such a major loss may have unforeseen consequences on both global and regional economies.

6. Global export restrictions

In April, the majority of the world considered introducing temporary global export restrictions. In the middle of April, there were already 88 such measures in effect. Once it was clear that this problem wasn’t going away anytime soon, the world had to find an alternative solution. First of all, restricting global trade would cause huge economic problems in the future which would affect people’s lives in so many ways. Second, if we were to survive as a species, we had to continue trading basic supplies and medical supplies. This is why global export restrictions aren’t likely to make a major comeback anytime soon.

In conclusion

If one thing is certain, this is the fact that things aren’t looking that great but there are various indications that they may look up in the nearest future. Governments all over the globe are considering various measures that could put international trade back on the right track. Still, it will take a lot of effort and careful consideration before this can be done in a safe manner. So, when will the situation return to what it was before COVID-19? This is not a question that one could give a straightforward answer to. Fortunately, international trade is too important to be ignored.