TRANSPORTATION

If world trade is the main driver for the transport of goods, it is both tourism and traveling abroad that appear to be that of passenger transportation. After two years of rising tensions between the U.S. and China due to their tariff dispute, world trade grew by just +1.4% in volume terms in 2019 against +4% in 2018. At the start of 2020, things were looking better because the U.S. and China ended up agreeing on a trade deal in January aimed at calming trade frictions. Since then, however, there have been devastating spillover effects of the coronavirus outbreak across the global economy and world trade as a result. As our latest world trade growth forecast is expected to hit a nasty -4.5% in 2020, it is no wonder that the whole transportation industry has been going through harsh hardships since February.   

This is especially the case for the air transport (sub)sector, plagued by lockdown measures affecting nearly half the world population. These lockdowns make any travel abroad impossible and worldwide tourist activities have collapsed accordingly. No matter which country, airlines have been battling for their survival: they are expected to lose around USD300bn in revenues this year due to the current grounding of 80% of the world aircraft fleet. Governments have already promised bailouts to keep the industry afloat as ongoing lockdowns are wreaking havoc on all (low-cost) airlines, especially highly leveraged ones. The sea transport (sub)sector has been struggling, too. While container transportation is coping with the current slump in world trade, dry-bulk and tanker operators may take better advantage of the transport of essential food commodities and the need of skyrocketing capacities in oil storage, respectively. However, this should hardly help them weather the current storm untouched.  

Because of its flexibility, road transport is usually used to carry goods nationwide. It takes the lion’s share of the transportation market as a whole, in spite of the fact that the bigger the country, the easier rail transport is. Even if both of them have braced for the slowdown in their activity level for 2020, they might face a different hurdle. Now that the end of lockdowns is getting closer, road transport might run short of trucking drivers: either theywould need rest or they could get sick after this stressful period as road transport has been the only way of delivering food and medicines to retailing outlets during the coronavirus crisis.