China’s factory activity slumps in February
China’s factory activity slumps in February, after the world’s second largest economy has been hit by the coronavirus outbreak. The Caixin/ Markit Manufacturing Purchasing Managers’ Index (PMI) came in at 40.3 for February – the lowest reading since the survey was launched in early 2004.
The index has decreased sharply from the reading of 51.1 in January. It was also significantly lower than the 45.7 which was forecasted from a Reuters poll of experts. The latest index of 40.3 indicates that output is contracting due to the figure being under the 50-mark. The underlying cause of this is undoubtably due to the measures that were put in place by authorities in order to try and contain the coronavirus outbreak.
With factories reopening and new measures being put in place to aid and boost business confidence, the situation is likely to improve in the long run. However, in the short run many analysts are forecasting that the epidemic will cause decreased growth and profit forecasts in the first quarter.
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Amazon increases its same day shipping program
Amazon is increasing its same day delivery program to 6 more cities including Philadelphia, Phoenix, Orlando and Dallas. The rollout will see a network of new mini-fulfillment centers being built in locations near key metro areas. The e-commerce company said that these buildings were the first of their kind.
The new warehouses will allow Amazon Prime members in these areas to choose from an assortment of roughly 3 million items that have been marked as same day delivery. Amazon stated that the move will not only speed up the delivery process for consumers but also achieve this with lower carbon emissions.
According to a company blog post this will be possible “because these new facilities are in close proximity to customers, reducing the need for aircraft transport and generally decreasing the distance drivers have to travel to deliver packages to our customers”.
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Coronavirus renders nearly 9% of container ships inactive
According to the latest figures from Alphaliner, the COVID-19 outbreak and the associated quarantines to prevent it from spreading, have led to a record number of blank sailings. The inactive fleet size has swelled to 2.4 million TEUs, which is equivalent to 8.8% of global capacity, with the figure being greater than the 1.52 million TEUs cancelled during the 2009 financial crisis.
Several U.S. ports including the port of Los Angeles, Long Beach and Oakland are all reporting cancelled or blank sailings from the beginning of the year. According to Phillip Sanfield, director of media relations at the Port of Los Angeles, although some production has shifted from China to other South Asian countries, “unfortunately, for every container that is coming out of there we’re losing two and a half from China so that it’s not an equal trade-off”.
While many factories in China are starting to resume production, many are running at lower production levels due to staffing shortages. As a result, the number of ships leaving Chinese ports may not increase any time soon.
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Have a lovely weekend!
