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CargoMetrics data reveals China cargo collapse as virus gums up flow

BOSTON big-data company CargoMetrics says imports from China into the US ?are in freefall?according to CEO Scott Borgerson and Dan Brutlag, head of trading signal and data products

01 March 2020 - 19:00

BOSTON big-data company CargoMetrics says imports from China into the US ?are in freefall?according to CEO Scott Borgerson and Dan Brutlag, head of trading signal and data products.

After February 7, volumes began to nosedive, with the pace of declines accelerating through February 17, the last day of the index data provided by CargoMetrics, reported American Shipper.



Dry cargo volume is down around 40 per cent compared to the month before Chinese New Year, Mr Borgerson said.



CargoMetrics also tracks oil flows. 'The export data is agnostic to destination so that volume is not necessarily going to China, although historically, a great deal of it has,?said Mr Brutlag.



What the data shows is that the volumes are actually up, from 24.9 million barrels per day on Chinese New Year to 27.7 million b/d on February 17.



The way to resolve this apparent contradiction is to understand that it takes 30-40 days for transport crude oil to China. The question is whether they?ll be able to unload when they get there.



?The anchorages could start to get pretty filled up and the ships could become floating storage facilities,?said Mr Borgerson. ?On one hand, that could have a counterintuitive positive effect on freight rates. On the other hand, if commodities can?t get imported to China, which is the main driver of everything globally for freight and commodities, that is not good,?he said.



What happens in the next few weeks is ?critical,?said Mr Borgerson. ?Shipping moves 90 per cent of the planet?s trade, and while China is not literally an island, its economy is figuratively one because it imports nearly all of its raw materials and exports nearly all of its finished goods by sea. So, the lens we apply is very much a leading indicator for Chinese industrial activity and productivity,?Mr Borgerson said.



Pressure on the global trade network could be alleviated if ?China gets people moving around and factories open up, supply chains can deal with the inventories that are building up, and all the ships that are sailing there can discharge? he said.


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