Protests in Myanmar halt sugar imports

Published 2021년 3월 18일

Trading activity has become limited in Myanmar due to shipping lines suspending operations at ports from the widespread protests against the country's military coup. This has caused container shipment delays and significantly reduced sugar imports into the country. The street protests have become widespread, putting pressure on the country’s logistics sector, with container trucks limiting operations, resulting in container cargoes remaining stuck at shipping ports.

Protests result in logistical disruptions

A key contributor in the freight disruption has been supply-chain workers joining the protests, locally known as the CDM (civil disobedience movement). The port authority’s customs department is also operating at half capacity, with workers forced to “enter the building by the back door” since protesters block the front entrance. Warehouses, container freight stations, and distribution centers have all been significantly affected by CDM, resulting in closures and others operating with only 20%-50% of the regular workforce.

(Myanmar Industrial Port, Yangon) Source: JOC

A daily average of 100 containers a day moves out of Yangon’s four main ports, a significant decrease from an average of 800 boxes before the coup. About 90% of Yangon’s 4,000 container-truck drivers have halted work. The situation may add to a global container shortage triggered by COVID-19 as government lockdowns to curb infections limit travel and consumers increase purchasing. According to World Container Index data and Bloomberg, spot rates for transporting 40-foot boxes increased by an average of 50% in 2020.

Source: Bloomberg

The upheaval in Myanmar emerges at an inconvenient time when Asian container markets were already facing problems due to a shortage of containers and severe congestion at ports. This has caused container rates for intra-Asia trade lanes to surge by nearly 400% since last November. Shippers are shifting from ocean freight to intermodal transportation via truck and rail to improve reliability and ensure efficient delivery. Bank closures have also made it difficult for traders to execute payments in US dollars. The disruption to banking operations has resulted in forwarders and shippers not being able to process customs documents, leading to delays.

Impact on sugar imports

Myanmar is one of the ten largest Thai white and refined sugar importers globally, procuring 115,589 MT in 2020. However, it is expected that the closure of factories and weaker end-user demand in Myanmar will limit demand for Thai sugar imports this year. It is currently unknown when factories will reopen, and the reduction in Thai sugar imports has caused a significant decrease in Thai sugar prices.

Thai 45i refined sugar cash premiums

Source: S & P Global Platts

Despite decreased sugar production in the 2020-21 marketing season, Thai physical cash premiums have declined due to weaker demand from China, Vietnam, and Myanmar. Thai 45i refined sugar for prompt shipment was recorded at a premium of USD51/MT to the London No. 5 March futures on Feb. 11, an eight-month low last assessed at this level on June 24, 2020. Recently, the premiums have increased slightly, assessed at USD54/MT over May futures on March 15. However, prices are expected to remain low in the coming months as it is not yet known when factories will reopen in Myanmar.