The Coronavirus (COVID-19) drastically affected every industry. Preventive measures, such as community quarantines, lockdowns, and temporary business closures being implemented create a domino effect in the industry and world economy.
Did the pandemic cause major disruptions and low revenues in businesses directly related to importation and shipping services? In this article, you’ll learn how the import and shipping market has been affected by the pandemic.
Halted International Imports
International imports play a crucial role both in eCommerce and supplying brick-and-mortar business demands. During the spike of pandemic morbidity and fatality rates, the international import market felt a halt in operations, only allowing importation of basic commodities, such as food, health supplies, and medicines.
Global Export Restrictions
In response to the COVID-19 pandemic, many countries have imposed temporary export restrictions of some foodstuffs and certain medical goods to mitigate potential key supplies shortages.
Here are the details of the Congressional Research Service report concerning the export restrictions during the pandemic:
- The World Trade Organization (WTO) reported that export bans went over 90% of trade restrictions due to the pandemic.
- About 90 countries have imposed export restrictions and took over 197 actions limiting or banning the export of certain commodities.
- Between January and August last year, 67 countries took 152 imposed export restrictions on general medical supplies, like personal protective equipment (PPE), medical equipment, sanitation products, chemicals, and other medical goods.
- Export restrictions created a domino effect in the world economy, significantly affecting volatility and level of supply and prices.
Due to prolonged uncertainty levels, the export market experienced sluggish operations as the demand and supply aren’t favorable as they used to be. The economic downturn was observed with the low oil demand in 2020.
Global demand and exports for crude oil were 100.1 million barrels per day in 2019, which was projected to decline to 91.3 million barrels daily in 2020.
Protecting The Supply Chain
There was a great concern that arose from using imported goods because of the risk of acquiring the virus in 2020. Imported goods from the United States and China were perceived as risky by consumers (47% of the respondents) in other countries. This results in people becoming more nationalistic, patronizing their local products during such a crisis.
Speculations and fear about acquiring coronavirus through imported goods were addressed in a Centers for Disease Control and Prevention (CDC) website post. While the COVID-19 virus can survive on surfaces for a short period, it’s unlikely to spread via imported goods from affected countries. The virus is transmitted through droplets when sneezing or coughing. Also, export laws are very strict, so exporters comply with safety and hygiene protocols.
With the COVID virus spreading worldwide, many countries had to close borders, which caused significant effects on the economy. Demand for goods has been reduced due to loss of income, and border controls and international travel restrictions have increased the costs of doing business that prevented tradeable goods from being consumed.
For these reasons, the Association of Southeast Asian Nations (ASEAN) set forth trade measures because of the spike in demand for certain products. Trade measures include tariff removal and export restrictions. While these steps are temporary, ASEAN said that there’s a risk of permanent restrictive trade measures.
Tariff Removal Creates More Jobs
In the United States, importation was 5.5 percent lower in November 2020 than at this point in 2019. Also, real goods exports in 2020 were 9.3 percent lower in 2019. Because of this trend, purchases of consumer goods and automobiles decreased, affecting business owners and their employees.
Tariffs tend to slow economic growth during the pandemic. Reducing or removing tariffs or tax imposed on imports was perceived as an effective solution to create more jobs because trade is a key element in job creation.
The import and export market has been affected by business uncertainties and consumer fear brought about by the COVID-19 pandemic. The temporary halt in operations and restrictions were experienced at the peak of morbidity and mortality cases in 2020. Export curbs by large exporters during the pandemic resulted in decreased domestic prices and increased domestic availability of medical products.