Global trade threatened

21 June 2021

Salikhov Marcel R. President, Principal Director on Economic Studies, Head of the Economic Department

Marcel Salikhov, President of the Institute for Energy and Finance took part in the OTRazhenie program on the OTR TV channel devoted to the current situation in world trade.

Marcel Robertovich, it seems to me that the situation is a little more serious than we just discussed. Firstly, even if we take the Chinese province of Guangdong, there are probably tens of thousands of containers a day accumulating there, and this is almost one of the main transport hubs in this term.

- Yes, indeed, the port that was closed, Yantian, it is responsible for about 10% of container exports from China. Accordingly, this is one of such key Chinese ports through which large industrial centers, Shenzhen, Foshan, export goods all over the world. But you need to understand that this problem is temporary, because the port did not work for some time, the workers were quarantined, now the port managers are gradually returning workers, and the port is already reaching normal loading. But...

Of course, logistics is not just about opening and closing a port. Moreover, a delay of even several days can lead to a disruption in the supply chain. And one way or another, the companies that participate in this suffer losses. The question is, then on whom they will shift all this.

- Naturally, the correct answer is to the consumer.

- And this is already being observed in general. The cost of transportation and logistics has now increased dramatically, 3-4 times for the flow from China, which is the main supplier of consumer goods for the whole world.

What other product categories might be feeling the impact of this crisis?

-As we all know, most of the consumer goods come from China, so there is a wide range.

I would also like to return to our country. We said that there are many goods that are imported into Russia from China already assembled, but we also mentioned components, and we have production facilities that are fully operational and depend on components from the countries of the Asia-Pacific region. And what will happen to them?

- Yes, indeed, there are many industries, well, almost all industries to one degree or another depend on the supply of components, primarily from China. But the current crisis related to the southern ports concerns Russia to a lesser extent, because supplies to Russia are carried out through the north or by rail, and so the closure of Yantian will primarily affect Europe and America.

But the story with the Suez Canal - did it teach world trade anything at all? Do you have any ideas for duplicate schemes?

- Indeed, many companies are thinking about diversifying their transport routes. There is also a Russian proposal regarding the use of the Northern Sea Route as an alternative for the supply of goods between Europe and Asia. But, unfortunately, due to various kinds of reasons, both technical and financial, the NSR is not used to transport containers, that is, now it is used exclusively to transport LNG and oil, and goods that are needed by the same oil or gas companies involved in field development.

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