Coronavirus outbreak to impact Asia-Pacific port operators: Moody’s

HYDERABAD:  The coronavirus outbreak in China is credit negative for Asia Pacific’s port operators, Moody’s said. According to the global ratings firm, the virus outbreak disrupts domestic and global supply chains and lowers discretionary consumer spending, which will reduce the throughput growth of Asia Pacific’s ports in 2020.

“We expect the coronavirus outbreak will have a larger negative impact on ports than that in 2003 — outbreak of Severe Acute Respiratory Sydrome (SARS) — because China now has bigger weight in the global economy than in 2003 and the global supply chain is more globally integrated,” it said in a note on Tuesday.

It added that extended factory shutdowns in China and containment measures in Asia Pacific countries have hampered manufacturing and logistics sectors and the current production slowdown will create a backlog of orders resulting in deferred growth of trade activity, once the situation improves.

“We expect these factors will reduce container throughput growth, especially at Chinese ports such as Shanghai International Port (Group) Co Ltd, and transshipment hubs such as PSA Corporation Limited,” it said.

Some of the shipping firms like AP Moller-Maersk A/S and CMA CGM SA have already announced blank sailings, reflecting weakened output from China and low global trade activity because of the outbreak. According to Moody’s, due to production stoppages at bulk cargo handling ports in China, energy demand in the country may decline, leading to associated bulk shipments such as iron ore, oil, liquefied natural gas and coal, taking a hit along. That said, rated Indian ports handling bulk commodities were unlikely to be affected as they handle negligible volumes linked to China. Meanwhile, the virus outbreak could also reduce cruise activity following the quarantine of cruise ships in Hong Kong and Japan. “That said, the potential reduction of revenue and cash flow from cruises had limited impact on our rated port companies because their exposure to the cruise segment is small,” it said.

India Ratings too flag concerns on virus impact
New Delhi: While Indian companies are unlikely to be materially affected in near term if the coronavirus outbreak remains contained in Hubei province, India Ratings said. But if it spreads over the next 3-4 months, sectors like pharmaceuticals, textiles and automobiles could face supply disruptions for critical raw materials, it observed.