A global study has revealed that international trade flows have remained robust despite COVID-19 while also revealing that the vast majority of companies are reconfiguring their supply chains in response to the pandemic.
Commissioned by global logistics company and port terminal operator DP World and conducted by the Economist Intelligence Unit (EIU) at the outbreak of the pandemic in Q1 2020, and updated in the final quarter of last year, it found that optimism about future growth is widespread despite the disruption to supply chains.
The study revealed that 42% of companies saw international revenue expand in the first half of 2020, even though there had been a fall in global trade of over 20% in the same period.
46% of companies in Europe experienced an expansion in international sales compared with 37% who reported a contraction.
In the Middle East and Africa reported international sales growth of 38% and 32% respectively.
Assuming COVID-19 does not worsen, and protectionist polices remain restrained, 77% of companies expect international sales to expand, the study noted.
Capturing the perspectives of business leaders across six regions (North America, South America, Europe, Middle East, Africa, and Asia Pacific), the study found that 83% of companies are reconfiguring their supply chains, including a diversification of the countries they intend to trade with.
“In Europe, for example, companies expected international sales from N. America to increase from 14% in 2019 to 21% in 2020. Conversely, in the Middle East international sales from N. America have decreased whilst revenue from Africa is expected to increase by 50%. In Asia-Pacific, 76% of companies are earning most of their international revenue from within the region. The next important continent for them in terms of international revenue is North America, which lagged behind at 13%.”
The study also revealed a resurgence for particular sectors that helped to support international trade. Globally, 58% of companies in construction reported a rise in international trade, particularly from North America following a demand for renovations at home.
Supported by data from the ITC, South African exports of pulp (the raw material for toilet paper) increased 163%. In Europe, during the first half of 2020, exports of cereals (particularly to the Middle East) and pharmaceutical products from the continent increased by 23% and 12% respectively.
“The movement of consumer goods across the world is also helping the global trade and logistics industry to rebound. 81% of major consumer goods manufacturers expect exports to have expanded in 2020
On average, companies allocated 32% of revenue from the first half of 2020 to help them switch suppliers or logistics providers and change production or purchasing locations.
Pandemic 'a positive agent'
Whilst 40% of companies indicated that trade flows had decreased due to declining demand, that 32% were affected by supply shortfall and 28% by constricted logistics, 43% of companies still anticipate trade flows to recover to pre-pandemic levels in under two years.
The study also highlighted an acceleration in their digital transformation and that in response to the pandemic, 40% of companies were implementing cloud computing for the first time. 38% were using IOT, 34% have adopted big data and analytics, 17% were introducing machine learning and 16% automation and robotics.
In addition, one in six respondents (16%) said enhancing their firm’s responsiveness to changes through real-time/predictive data analytics would be the most important factor determining how their company will be conducting international trade transactions in the future.
Sultan Ahmed Bin Sulayem, chairman and CEO of DP World , commented: “International trade has shown remarkable resilience during the pandemic and will play a critical role in facilitating the global recovery.
“The business community is more optimistic for the future than many expected, and the supply chain challenges exposed by the pandemic have acted as a positive agent for change. We expect the result will be global flows of trade that are more efficient and more robust.”