(Yicai Global) May 19 -- The resurgence of Covid-19 in China since March has had a big impact on the energy and chemical industry chain. Even though regions have taken steps to keep it unblocked, it will take time to fully recover, according to the findings of a survey of energy firms, chemical producers, and logistics providers.
The investigation was conducted by Liuliu Cloud Chain Technology Ningbo, which is engaged in the digitization services of the energy and chemical industry chain, details of which were revealed to Yicai Global by a company insider.
As an example, Yuanda Energy Chemical is a unit of Grand Resources Group and trader of energy and chemical products with annual sales of more than CNY20 billion (USD3 billion). The curbs on road transport in various regions of China due to Covid-19 have led to difficulty in picking up goods and frequent changes to orders, according to Zhou Lingna, the firm’s business director.
“We need to rearrange the supply and dispatch of goods, as well as frequently place, change and cancel orders.” he said. “Sometimes, the delivery of dispatched vehicles is blocked, and it’s necessary to rematch the consignees and sign new contracts.”
And due to the delayed delivery of goods, the payment collection cycle becomes longer, Zhou said. When commodity prices fluctuate greatly, it also raises the clients’ risks in fulfilling contracts.
Zhenhai Petrochemical Logistics is a provider of comprehensive logistics services based in Ningbo. Chairman Liu Zhimeng noted that during the Covid-19 outbreak, the transport costs at logistics firms have generally risen by more than 20 percent. That may even double or triple on some special routes in pandemic-hit areas.
“I know a goods owner who is offering CNY80,000 (USD11,823.5) for a truckload of commodities, but few companies are willing to transport them, when before the pandemic the price for such truckload of goods traveling from Shanghai to Harbin ranged from CNY20,000 to CNY30,000,” Liu revealed.
So, how does the energy and chemical industry chain cope with repeated impact from the pandemic? Yuanda Energy’s Zhou said that the visualization and collaborative management of the logistics chain can be improved through digital technology, so that each participant in the logistics chain can clearly know the real-time status of relevant transportation.
Yicai Global understands that at present large cargo owners and transportation companies in the energy and chemical industry chain are trying to establish a capacity resource pool that relies on their own supply sources and capacity resources. This, they hope, will enhance their capacity organization and operation service capabilities without having to invest more in equipment.
Chinese Transport Minister Li Xiaopeng held a meeting yesterday in which he asked for a close focus on ensuring supplies and stability of the industry chain to promote efficient coordination between the upstream and downstream logistics sectors and between supply and demand.
Editors: Liao Shumin, Peter Thomas