China’s decision to discard its controversial zero-COVID policy and reopen its borders is music to the ears of businesses and consumers around the world. It is hard to overstate just how crucial the reopening is for businesses, manufacturers and consumers globally, who are hoping the lift on border restrictions will improve supply chains and reduce uncertainty.
There has been surprise from some regarding the speed in which the country re-opened after maintaining such a hard-line stance for so long, and optimism from many who say the reopening will help China return to normal after several difficult years.
Marco Viglietta, Managing Director of Avion International Australia, said he was looking forward to the resumption of trade, and it was all hands on deck at Avion.
He highlighted the close working relationship between Avion Australia and Avion China in ensuring a seamless transition to the continuation of freight forwarding services.
“Along with our colleagues in China we have been preparing for the resumption of trade in and out China,” Mr Viglietta said. “Teamwork and close communications throughout this period meant we were ready to hit the ground as soon as the official announcement was made.”
Mr Viglietta said he believes that removing the zero-COVID policy will return China to a level playing field with the rest of the world in terms of logistics, as well as markedly increasing the amount of trade in and out of the country.
Steady increase in demand and services
Demand that has been building over the past few years will create opportunities for domestic and international freight forwarders. The reopening of borders means more frequent flights in and out of China, thus reducing costs that could potentially be passed onto consumers and creating better prices on imported goods.
For organisations that rely on import and export to and from China, the move will reduce bottlenecks and increase capacity across a myriad of industries. The decision will also benefit China’s economy, which shrunk by $US500 billion in 2022 due to the pandemic.
Avion analysts believe the reopening of China could be a silver lining in the current economic climate. However, they stress that the ongoing Ukraine war, interest rate hikes and the general sentiment crisis means the economic outlook for 2023 remains dim.
When will we see business as usual?
We have seen a modest increase in demand for both air and sea freight, with the latter experiencing slightly higher traffic as prices are better adjusted to the market, while the air freight rate is less responsive to the current situation. The fact that the reopening comes in line with the Chinese New Year holiday, where the entire market closes for more than a week, means the full impact won’t be seen for a while yet.
That said, Avion expects a jump in traffic in and out of China in the near future. ‘Business as usual’ will be a gradual process, as it will take time for businesses to build up confidence and restore normalcy. Realistically, we are looking at a timeframe between Q4 2023 to early 2024 before we see things completely return to pre-pandemic normal.
How Avion is preparing for the reopening surge
We are securing more staff to ensure a seamless transition on the operational side. At the same time, we are also actively seeking opportunities to collaborate with more airlines to facilitate the anticipated surge of demand. That way when the expected increase in demand occurs, we will remain at the forefront of global freight forwarding and logistics operations.