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Covid-19 impact on trade: How are the regional supply chains faring?

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As a key international trading partner, how is the region protecting its supply chain during the current crisis?

Trading has historically been an essential lifeline for the growth of the GCC region thanks to its central location – the bustling port at Dubai’s Deira area [pre-coronavirus] offered a glimpse into how wooden boats (or dhows) used the emirate as one of the main hubs to export and import goods in the past. Huge shipping yards and massive airports have since surfaced to carry forward that tradition, as they seek to cater to huge volumes of goods being transported from one region to another.

Just looking at Dubai, the emirate’s non-oil foreign trade values rose nearly 6 per cent to reach Dhs1.02 trillion during the first nine months of 2019, while volumes also grew by 22 per cent to reach 83 million tonnes during the period. Although the Covid-19 pandemic has practically halted international travel, cargo and freight operations have managed to continue functioning – albeit with restrictions – to fulfil the demand for essential goods.

The pandemic is expected to impact the global merchandise trade to the extent of 31.9 per cent under a pessimistic scenario and up to 12.9 per cent under an optimistic scenario in 2020, according to the World Trade Organization (WTO).

While most regions across the world are expected to see double digit trade declines between 12 to 17 per cent even under an optimistic scenario, the Middle East and Africa region is anticipated to see a more muted impact at 10 per cent this year, states Gopal R, global vice president, Transportation and Logistics Practice at consultancy Frost & Sullivan.

“The impact is likely to be more in case of extended shutdowns, mainly triggered by lower imports, in a pessimistic scenario,” he adds. Looking at the GCC region, restricted movements in recent weeks have impacted the flow of goods by up to 60 per cent due to freight capacity limitations on land, air and sea routes.

“Logistics and freight service providers are working on mitigation strategies to ease capacity limitations, which would help in improving the trade handling ability for the region,” Gopal explains.

See the full article on Gulf Business.com