Green Worldwide Shipping is the presenting sponsor of Global Atlanta's Trade Channel. Sign up here for monthly global trade updates.
Last Thursday, as a panel of trade experts took the stage, it was still unclear how Georgia‘s economy would be just a few days later.
For the most part, the Georgia Department of Economic Development and World Trade Center Atlanta’s State of Trade breakfast was looking back at a year where Georgia posted a 1.5 percent increase in exports and a record $143.3 billion total in trade, even as the U.S. as a whole saw exports declines at a time marked by trade spats.
Uncertainty was a given, but no one foresaw what would happen hours later, when Gov. Brian Kemp joined many state and local leaders around the country in recommending “social distancing” measures to stem the spread of Covid-19, the disease caused by the novel coronavirus that has spread throughout the world.
The dominoes soon began to fall, with public events closing and life entering a period of unprecedented change for the next few weeks and possibly for the foreseeable future.
As of Monday — just three days later — Mr. Kemp had closed all schools through the end of March, the CDC had recommended against events with more than 50 people, and President Donald Trump and public health experts issued guidance that Americans to avoid gathering in groups of 10 or eating out at restaurants.
Even before all that, though, the question was already how big a bite out of global GDP — and by extension, Georgia’s globally connected economy — this virus would take.
“We’re really playing the long game,” Bert Brantley, the Georgia Department of Economic Development’s chief operating officer, said during a keynote speech at the March 12 event, noting that the state’s 12 offices in 11 countries would continue working to position the state for the return of normalcy, whenever that may come.
“Whatever the national or international environment is, our goal is to be ahead of the curve,” Mr. Brantley said, offering that new projections from the Georgia Ports Authority indicate a less dire picture than previous estimates the port could see 30-40 declines in container traffic for 2020.
The authority, for its part, said pretty much the same in a note to users the next morning. The “precipitous drop in imports” in the first quarter could be mitigated by strong bookings on the water and new import distribution centers coming on line near Savannah.
“Further, GPA is receiving multiple reports that indicate Chinese supply lines and factories are resuming normal production,” the note read.
But with the markets now in panic mode and the state virtually shut down for an indefinite period, the baseline could end up being more unfavorable than when many members of the state’s consular corps and global business community gathered about 80 in all, eschewing handshakes in favor of elbow bumps with an air of unsettled joviality.
“This is a side effect of our networked economy,” Ruchi Shah, marketing director at the south Atlantic district of United Parcel Service Inc., said of disruptions to global supply chains — first in China, where scientists concur that the virus originated and then rippled out to the world.
Lisa Winton, CEO of Georgia-based Winton Machine said she was beginning to get “a little nervous” seeing Chinese suppliers go dark and hearing much of the same from “friendly competitors” during the early lockdown in northern Italy which quickly morphed into a nationwide shutdown.
As for the Winton Machine factory in Suwanee, executives were reviewing sick leave and flexible work policies, but she noted that it’s tough to telework from a factory floor.
With assurances coming out of Hong Kong that some of her downstream suppliers were beginning to fill orders, one major question mark was how her customers upstream would handle their invoices when faced with a protracted shutdown or a cash crunch.
“If they’re not open, they’re not paying their bills, then we can’t pay our suppliers,” Ms. Winton said, worrying also that larger companies would get a first crack at new raw materials coming out of China.
Jeff Lamb, director of corporate business development at customs broker DJ Powers & Co. in Savannah, said the tumult in the global trade world was causing some strange shuffles in activity.
Freighters — planes dedicated to cargo — were “singing the blues” with China taken out of the game earlier this year, but with ocean liners cutting capacity in line with falling demand and virus-related cancellations of passenger flights taking away their so-called “belly cargo” space, they were quickly called back into action. Ms. Shah added that UPS has seen many customers upgrade service to get components faster to keep processes running amid uncertainty.
The panel said the coronavirus could add fuel to some global shifts that were already under way, including a few that could benefit Georgia.
Mr. Trump’s trade war already had many companies reviewing their supply chains out of China, the “decoupling” sentiment that seems only to have increased after the outbreak exposed reliance on the country for drug ingredients and medical gear.
“One of the good things that is going to come of this is to highlight those weaknesses, those areas that we really need to focus on in the supply chain,” Ms. Winton said.
With the risks of running lean operations laid bare, Ms. Shah said some manufacturers are now looking at near-shoring, bi-coastal warehousing and upgrading their customers’ experience.
Mr. Lamb suggested ports like Savannah, with ample available berths and space for containers, will be well positioned versus their more crowded competitors on the West Coast, which could face bottlenecks when things pick back up.
Other aspects of this period are not so pleasant: Mr. Lamb, who sympathizes with some of the sentiments behind the China trade war, said tariff implementation had already been “painful” for smaller logistics firms, raising their costs as well as capital requirements to keep their customs bonds in place.
Still, the panelists stayed positive about the opportunities in the global markets over the long haul, even when challenged with a question as to why small companies would look at exporting when so much opportunity remains untapped in the U.S.
Mr. Lamb recommended getting in touch with what he called “nerds for exports” at the District Export Council, a group of private trade advisers convened by the U.S. Export Assistance Center in Atlanta.
“It’s less scary than you might think,” he said of selling abroad.
The state also stands ready to help, deputy commissioner for trade Mary Waters said at the event, noting that 90 percent of Georgia exporters are small and mid-sized firms.
Craig Lesser, the former Georgia economic development commissioner who moderated the panel, said the promise of worldwide commerce hit home when he met an online importer of Vidalia onions at a dinner in Moscow celebrating Delta Air Lines’ new flight there 15 years ago.
After that, he saw that trade is an enabler to the business expansions behind the “sexy headlines” trumpeting new foreign investment.
“Trade basically, in my view is the preamble to all that foreign investment because it is marketing for the state,” Mr. Lesser said. “The bottom line is that trade is such an extraordinarily significant part of this state’s economy.”