Shippers are keeping a close eye on the situation in China as the country steps away from its zero-COVID policy, which caused significant damage to its economy. According to China customs figures, November exports witnessed the biggest contraction since February 2020 falling almost 9% compared to last year. A quick recovery in the next quarter is improbable especially since demand continued to drop in December. Production at factories is now headed to a new shutdown, this time not caused by COVID-19 measures, but by a reduced labour force during the weeklong Lunar New Year holiday period – starting on 22 January. During an interview with Bloomberg about the impact of the COVID-19 situation in China on the global economy, Mary Lovely – an economics professor specialised in international trade and investment – said, “This certainly has implications on commodity exporters.” She noted that while it is unlikely China will witness a repeat of the COVID-19 era lockdowns, there are concerns about renewed supply chain disruption. Containerised trade is expected to remain under pressure during the first quarter of 2023 if not longer, experts believe. “Exports are contracting and are likely to remain weak over the next 12 months,” Ben Simpfendorfer, the Asia Pacific Lead for the Oliver Wyman consulting firm, told Bloomberg. Domestic and international trade are two key pillars of China’s economy. That is why the government pledged to boost domestic demand and consumption as a fundamental element to revive economic growth. Recently, the Chinese government held a conference attended by top leaders including President Xi Jinping to set economic policy priorities for 2023. The conference concluded that expanding consumption should “take precedence” as a key element towards boosting growth. The government also plans to support private businesses and encourage foreign investment. However, the way carriers are handling the general drop in demand for shipping between Asia and the rest of the world is slightly concerning. According to a Sea Intelligence report, “shipping lines are pouring capacity into both Transpacific and Asia-North Europe trades” despite the weakness in demand. Rates are expected to collapse further if liners do not cut back the capacity deployed on those trade lanes for the next quarter. “Given that demand growth has now stagnated, and freight rates are still dropping, it would make sense for the shipping lines to blank additional capacity during CNY (Chinese New Year) 2023 to try and stem the bleeding freight rates,” commented Alan Murphy, CEO of Sea-Intelligence. The only trade where carriers are being more careful with added capacity for Q1 2023 is the Asia-Mediterranean trade, says the report. Scheduled capacity during the Chinese New Year period of 2023 for this trade could drop nearly 479,000 TEU, as capacity reduction could reach 21.2%, according to Sea Intelligence. Advising on the current COVID-19 situation, Kuehne+Nagel sources reported that Chinese ports are still operating but efficiency is low due to lack of sufficient workforce. Trucking transportation is also operating normally with a slight impact due to drivers’ health conditions.