Shipping containers are stacked next to grand cranes at the Yangshan Deep Water Port in East China’s Shanghai on Tuesday. About 70 percent of cargoes from the Yangtze River Delta are transported overseas from this port, which is home to the world’s largest fully automated terminal. Photo: VCG

The China shipping prosperity index (CSPI) sank to an historic low in the first quarter of 2020, as the shipping industry runs to a ferocious turbulence amid the spread of the COVID-19 pandemic, according to an industry report. The report also forecast that the grim outlook will continue into the next quarter.

According to a report from the Shanghai International Shipping Institute, the CSPI in the first quarter dropped to 62.95 out of 100, indicating a very low level of development in the industry. The confidence index fell to 39.05, showing a "severe lack of confidence" among Chinese shipping companies. 

The CSPI and business confidence plunges were caused by an overall slide in business volumes among shipping companies. According to the report, despite the fact that over half of the shipping companies have fully resumed operations, more than 90 percent of the industry has witnessed a drop in orders. Almost 30 percent of companies are losing more than one third of their usual business. 

Luo Renjian, a research fellow at the Institute of Transportation Research at the National Development and Reform Commission, told the Global Times that the shrinking orders are also a result of halted international trade, which is reducing international market demand and disrupting global logistics chain. 

Government policy support is widely anticipated among port and shipping companies to reduce operational pressure amid the coronavirus pandemic. According to the report, over one third of companies are hoping for a reduction of or exemption from fees and taxes as they brace for the pandemic's full impact. 

For the second quarter, the CSPI is expected to rebound to 93.26, entering slightly more optimistic territory. Over 20 percent of surveyed companies believe the market will be stuck at a low level, but most shipping companies in the dry bulk market forecast a rebound six months after the pandemic ends. 

Global Times