Shanghai lockdown could impact Thai logistics firms

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The recent city-wide lockdown imposed in Shanghai, a key financial and manufacturing hub of China, will likely have an impact on sentiment of the logistics sector, analysts said on Monday.

Analysts at KTB Securities predicted in a research note that the shipping and logistics sector would see a brief impact from the lockdown measures in Shanghai as it’s one of the world’s busiest container ports. 

“Shipping operations will be halted due to a sudden lack of demand,” KTB analyst Amnart Ngosawang, explained.

By midday, shares in Regional Container Lines Plc (RCL) dropped by 3.43 per cent from its prior closing to 42.25 baht. Precious Shipping Plc (PSL) fell by 3.39 per cent to 17.10 baht. 

JWD Infologistics Plc (JWD) also dipped by 2.4 per cent to 16.30 baht.

Over the weekend, Shanghai reported a record high of Covid-19 infections of about 3,500 cases a day, prompting authorities to enforce a nine-day lockdown in two phases, with mass testing getting underway. 

It’s a small number of new cases by global standards, but it’s enough to cause concern through the broader region as China has in recent months strictly imposed its zero-Covid policy to control the virus. In comparison, Thailand has seen over 20,000 cases per day since late February.

Under the first phase beginning from Monday to April 1, the lockdown will take place in areas east of the Huangpu River, or Pudong. Then the second phase will see areas west of the river, or Puxi, under restrictions from April 1 through April 5.

During the lockdown, citizens will be ordered to stay home, and unnecessary businesses will be shuttered. Public transportation will also be halted, with only approved vehicles allowed on the streets. 

KTB analysts, however, assessed that the impact on Thailand would only be limited as shipping businesses are subject to growth in line with global economic recovery from the Covid-19 pandemic. 

“We expect the shipments throughout 2022 to continue to grow,” said Amnart. 

According to Commerce Ministry data, China was Thailand’s second largest trade partner with trade value over 902 billion baht in 2021, trailing only the United States. 

Thailand’s main exports to China include plastic pellets, rubber, chemicals, and agricultural goods.

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