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Global trade is alive and well – but the global health situation is continuing to distort trade patterns and creating uncertainty, two multinational forwarders said today.

Predictions are hard to make: will western economies start to embrace services over goods as vaccinations ease restrictions?

In an attempt to read the demand better, Flexport has launched a new indicator, based on its own data, combined with US consumption behaviour.

The monthly Flexport Post-Covid Indicator examines the correlation between shipping flows, and US demand for goods, using data from the US Bureau of Economic Analysis (BEA).

Readings near zero signal a return to the pre-Covid norm, in which a portion of demand shifts back from goods to services. Readings of about 100 signal continued deviation from that, on a par with the goods demand of summer 2020.

The indicator currently suggests demand for goods is falling, to a level closer to pre-Covid.

For March, the Flexport index peaked at 133; April, 114, May shows a predicted 113 and for June, Flexport predicts an index of 82. However, the forwarder noted that predictions were difficult without historical data.

“Typically, we’d get forecasting guidance by looking at past consumer behaviour. But Covid-19 created an unparalleled disruption in consumption and trade, in both breadth and volume. We don’t have any comparable episodes in history to help guide us, so our predictions are narrower.”

Nevertheless, Flexport noted: “The big prediction is that June will see a substantial goods share drop from current demand. But that doesn’t necessarily equal a return toward pre-Covid patterns.

“As Covid scenarios evolve, most companies and analysts are banking on one of two plausible, yet contradictory stories about personal consumption expenditures: consumers revert to their pre-Covid behaviour, or they keep up the goods-buying habits they honed during Covid.

“We don’t know what will occur yet, because of the magnitude and unusualness of the situation. The patterns we’re uncovering are history in the making.”

But what we do know, noted DHL Global Forwarding chief Tim Scharwath in a blog post today, is that the global economy is fine.

He said: “The global economy hasn’t come to a halt. What we are observing is not an economic crisis, but a health crisis, which in the worst case would have birthed an economic crisis. In fact, global economy and globalisation are even helping us to fight this health crisis…”

He pointed to hi-tech, machinery parts and automotive driving growth, with both air and ocean exceeding pre-Covid levels of demand. Consumer goods are accounting for some 40% of total growth, driven by working from home.

Mr Scharwath, like Flexport, notes that “patterns will shift again”.

“But some changes – for instance the new role of e-commerce – will stay. In addition, as we can already observe in some countries where a high percentage of the population has been vaccinated, there will also be a re-bound of industries which were naturally more affected by the Covid-19 pandemic, such as the service sector.”

He concluded: “That shows not only how adaptable but also how connected the global economy is. Like any system, it has its limitations, of course. But these limitations are not beyond our scope. Will there be any setbacks – like we are currently observing in Yantian? Yes – but it’s in our hands to overcome hurdles, remove barriers and ensure fair and sustainable trade.”

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