The rapid rise in container and dry bulk trade within Asia has provided strong support to global trade in the last decade. Of the 9.9bt of estimated world seaborne trade in 2013, more than 10% was intra-Asian trade of containers and key dry bulk commodities. Since 2003, world seaborne trade has risen by 50%, and the doubling of intra-Asian trade of containers and selected dry bulk commodities (as shown on the graph) has driven 20% of this growth.
All Boxed Up
Intra-Asian container trade volumes have been one of the fastest growing parts of global container trade, increasing on average by 9% p.a. in the last ten years. By 2013, intra-Asian trade (including Indian Sub-Continent volumes) exceeded an estimated 500mt, 33% of total container trade. Rapid economic development across Asian countries has underpinned this growth, alongside the multi-location manufacturing processes of goods prior to worldwide export. Trade involving China and ASEAN nations has unsurprisingly led the way.
In the dry bulk sector, intra-Asian trade of iron ore, nickel ore, bauxite and coal (including thermal coal, coking coal and lignite) surpassed 580mt in 2013, having increased on average by 11% p.a. over the decade (compared with 6% p.a. growth in total dry bulk trade). This is despite a sharp drop in Indian iron ore exports to China since 2009, as India has cracked down on illegal iron ore mining and limited exports.
Intra-Asian coal volumes however have surged, with shipments from Indonesia trebling since 2003. Much of this growth has been in exports to India and China, led by Indian construction of coal-fired power stations. Meanwhile, coal price dynamics encouraged greater Chinese imports (of low quality coal in particular), despite the phenomenal scale of the country’s domestic coal mining industry. Yet China’s role in driving dry bulk trade growth doesn’t stop with the major bulks; imports of nickel ore and bauxite reached 143mt in 2013, up from just 3mt in 2005.
Surprises in Store?
So can intra-Asian trade continue to provide this boost to seaborne volumes? Prospects for container trade in the region are positive, as consumer demand and manufacturing in emerging economies continues to grow. For bulk, as ever, Chinese and Indian demand is key. While there remains room for further significant growth, increasing Chinese efforts to reduce air pollution could have some impact. Regulatory risks exist on the supply-side too, with Indonesia seemingly keen to export more processed materials, rather than raw minerals.
Yet in recent years the strength of Asian demand has frequently surpassed expectations, and for many intra-Asian trades the outlook remains relatively bright. While growth on short-haul routes doesn’t have quite the same impact as longer-haul trade, the rapid growth in volumes has nonetheless proved a very welcome gift for total seaborne trade.