PSA International group ceo Tan Chong Meng says the Covid-19 pandemic will likely set back the global terminal operator’s business by two – three years, and sees a rise in regionalisation.
Sharing his thoughts candidly on the coming months in video message posted on social media, and which can be viewed above, Tan said that people had to “expect and be prepared for a recession”.
“An economic rebound can only happen with healthy companies, that is certainly not the case now,” he said.
“Yes, there was a mad dash towards online retail and virtual working platforms but that has only managed to keep the world going on a very low gear.”
The recovery for trade and PSA’s business globally will take years rather than months.
“Although consumption will ultimately return it will remain sluggish in the medium term, and hence our business which relies on trade volumes will likely be set back by about two to three years and even that depends on how long the world will debilitate under Covid-19,” Tan explained.
The PSA ceo also foresees a shift towards regionalisation and less reliance on China as a centre of production.
“Producers and manufacturers might focus more on regionalisation to shorten supply chains, manage inventory more effectively and reach markets more quickly. This could accelerate the move of production from traditional global factories like China to regional manufacturing zones.
“Intra-regional trade would likely grow faster than inter-regional trade and for our transhipment activities hub and spoke excellence could become a preferential service over relay transhipment,” he said.
Multi-national corporation customers would look strategically location regional logistic centres.
“The game changers could be inter-modal seamlessness and efficiency between sea, rail, barge, truck and air, aided by digital continuity and control across transportation modes,” Tan forecast.