URSABLOG: Hope Is Contagious Too

As if the year hadn’t started badly enough with high bunker prices, a low BDI (and Brexit), the discovery and spread of the coronavirus, and all the troubles that follow in its wake is leading us into unknown waters.

I recently read Death in Venice by Thomas Mann, long on my ‘want to read’ list. I won’t dwell on the main theme of the story - beauty, obsession, the battle between perfection in art and real life – but the backdrop of the story is a cholera epidemic in Venice. What struck me as I was reading it was the natural instinct of the authorities, any authority, is to pretend an epidemic isn’t happening as far as the public is concerned, whilst attempting to prevent the spread.

I remembered this particular feature yesterday when l read a very powerful piece by Da Shiji (not his real name) in the China Media Project called The Truth about “Dramatic Action”.  I commend it to you: it reads like a thriller and is written with the righteous anger of someone trapped in Wuhan, scornful of the under and overreaction of the authorities. Da documents the timeline of the breakout, and in particular the authorities’ reactions to it.

On the 8th December 2019 the first case of coronavirus was detected in a worker at the Huanan Seafood Market which at around 4-5 hectares is huge. And it’s not just fish that was sold there but other live animals including: hedgehogs, civet cats, peacocks, bamboo rats. Yummy. Soon the number of infected people jumped and the authorities picked up chatter of this on social media, and promptly censored or deleted any mention of it online. Then on 30th December they put the stability preservation system into effect prohibiting hospitals, clinics and other healthcare units from releasing any information. They continued to insist publicly that there were no cases of human-to-human transmission, and that no medical personnel had become infected. This, it turned out, was simply not true.

It was not, of course, that the authorities were simply turning a blind eye, in fact between 8th-31st December they were working flat out to trace and identify the virus. Meng Xin, a reasearcher at the Chinese Centre for Disease Control and Prevention has since revealed:

My colleagues worked hard through the night, and within one week had managed to: successfully isolate the disease, sequence the coronavirus genome and confirmed the origin of the disease. In less than two weeks, they had developed test reagents and had distributed them to provincial CDCs, and they had reviewed anywhere from dozens to hundreds of specimens from Wuhan …. actions that would earn unanimous praise from international colleagues and the World Health Organization, and that would save precious time in the prevention and control of the epidemic.

By January 11th Chinese medical authorities had confirmed to their international collaborators that the coronavirus was causing the Wuhan pneumonia epidemic, and shared the genome sequence with the World Health Organisation (WHO). But the government, local or national, didn’t tell their own people instead maintaining strict secrecy, throwing away any opportunity to prevent or control the spread of the virus. Social stability – and political control instinctively came first, and everything was done to keep the severity of the outbreak from the general public. As Da notes:

Front-line doctors who spoke up about the outbreak were taken in for questioning. Eight Wuhan citizens who dared to post about the outbreak online were summoned by the police and singled out in public announcements through official media in order to terrify the public and force people to remain quiet.

It was approaching Chinese New Year and nothing could stop the tourist season (just like in Death in Venice).

Up to January 17, tourism authorities in Wuhan continued to launch the “Spring Festival Culture Benefitting the People Campaign”, issuing hundreds of thousands of free tickets to attractions in Wuhan in order to encourage tourists from all over the country to come to the area for sightseeing. Through to January 19, Baibuting Garden, an area advertised as a model residential community in Wuhan, was still holding a Spring Festival banquet celebration for its 40,000 residents. There was no attempt to stem the flow of people to Wuhan from all over the country and around the world. During what was the most critical phase for controlling the outbreak, Wuhan was essentially an open city owing to the efforts of local officials to keep a lid on the story.

Finally, from pressure at the top, the true nature of the virus was made public, and shortly after that the city of Wuhan was shut down. Leaving aside the furious public reaction, and the party’s reaction to it, the intimidation of journalists, the sheer scale of the quarantine measures is staggering. Including Wuhan, fourteen cities in the province of Hubei, a total of 35 million people, are facing similar measures. As Da eloquently puts it:

Wuhan under quarantine has already begun to feel like a ghost city. From New Year’s Eve into New Year’s Day, you couldn’t hear a single firecracker going off. I have lived in this city for decades already, and this is the first time that the Chinese New Year has passed without the sound of fireworks. The entire city is silent. The traffic lanes, usually jammed with vehicles, are empty. All public places are now inaccessible. No one is associating or organizing get togethers. There is no sense of community. No public life. We are all atomized individuals, living in isolation in our own homes, passing the time watching the television, or glued to our mobiles.

In this dead silence, fear spreads.

We are seeing this in shipping too, from a purely practical point of view. Crew changes and vessel attendance in certain ports are banned or ‘not recommended’. For example, Tianjin:

Local immigration has banned crew change at this stage. Supt/Tech is not permit to board vsl. Local store supply is allowed if deliverer pass temperature inspection

And from a market perspective, the price of iron ore has fallen over 10% on the fears that the virus could affect demand for steel; and the capesize index of the BDI is in negative territory.

Reading and thinking about all this also made me think of a book I read a long time ago: The Plague (or in French La Peste) by Albert Camus. Regular readers will know of my admiration for Camus, and his philosophy of how life is important, but absurd; shipbrokers, well those that can read, can take some comfort in The Myth of Sisyphus. But something about that story reminded me of the present situation.

Firstly, it is usually human actions that spread the virus whilst trying to ‘protect public safety’, whether it’s the gathering and cremation of infected rats, or promoting New Year Celebrations. Secondly, the measures to control the disease are usually more damaging than the effects of the disease itself. Thirdly, unless you are personally affected by the virus, or are close to someone affected by it, the nearest you get to it is the news. Finally, people do absurd things when faced with a change of environment, particularly a stressful and sudden change.

We should be rightly concerned that the quarantine measures in place will affect the business of shipping, and therefore trade. If ideas, as I mentioned last week, follow trade routes, so do viruses. But one consolation for us, if no real consolation for Mr Da, was provided by Tyler Broda, an analyst at RBC Capital Markets, quoted in the Financial Times:

“On the positive side, we believe Chinese policymakers … [are] likely to provide emergency financing which could help to moderate impact,” he said. Beijing could also raise spending on infrastructure and property projects — as it has done numerous times over the past decade — to support growth… “This will probably further erode the longer-term outlook but could allow for the sector to have a sharp recovery.”

So look on the bright side: bunker prices have fallen, Chinese New Year is going on a little longer than usual and we may get a real burst of stimulus in China again. And think what happened to the freight markets after the SARS outbreak finished in July 2003. A coincidence? Even if history never repeats itself, even a small burst of stimulus could bring happy days back again. In the meantime we should hold on to our hats, if not our face masks, and remember what Camus had one of his characters say in The Plague:

“But what does it mean, the plague? It's life, that's all.”

Simon Ward

www.ursashipbrokers.com