Archives for category: global seaborne trade

Shipping and energy are two central features of the modern globalised economy. Indeed, in 2019 total seaborne trade is projected to exceed 12bn tonnes, while primary energy demand is expected to stand at over 14bn tonnes of oil equivalent: around 1.6 tonnes of seaborne trade and 1.8 toe of energy for everyone on the planet. What is the relationship between these salient features of global economic activity?

For the full version of this article, please go to Shipping Intelligence Network.

 

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Environmental concerns are increasingly to the fore in world political economy, with the global energy mix and questions of “peak demand” for different fossil fuels receiving increasing attention as a result. While there is clearly still much uncertainty around this topic, it is worth exploring how shipping continues to develop alongside the changing dynamics of the global energy mix.

For the full version of this article, please go to Shipping Intelligence Network.

“Going the extra mile” has become a classic part of “business-speak”, but in the shipping business it can have a more literal meaning. Distance plays a huge role in determining the impact of trade flows on vessel demand, and is therefore a key variable in the shipping market equation. Tracking the changes in the distances covered by seaborne trade is an important element of the demand-side framework.

For the full version of this article, please go to Shipping Intelligence Network.

Across the global seaborne trade spectrum, crude oil is generally seen as a fairly mature element, and average growth of not much more than 1% p.a. across the period since the financial crisis appears to back that up. But in that period there have also been dynamics at play which have had a major impact on tanker demand patterns, and on closer inspection it has not been the slow lane all the way either…

For the full version of this article, please go to Shipping Intelligence Network.

 

The festive season is coming closer, and for many of us the time to get the seasonal shopping done is running out. For the containership sector, however, the peak shipping season was back in the summer, giving us a chance to reflect already on how consumer and manufacturing trends have left box shipping looking back on a busy year in terms of volumes.

For the full version of this article, please go to Shipping Intelligence Network.

By the late 1800s, the shipping industry had been transformed by the introduction of steam power and iron ships. Coal and grain were two of the most important cargoes, alongside timber, sugar, cotton and tea. While technology, the sheer scale of the business, and the global cargo mix, have of course all changed since then, dry bulk cargoes have retained a position at the heart of global seaborne trade.

For the full version of this article, please go to Shipping Intelligence Network.

World seaborne trade, whilst still growing at a relatively steady pace, has seen a slightly less rapid rate of growth since 2015, compared to both the longer-term historical average, and the more recent 2011-14 period. Economists have spent a lot of time sifting through the factors that might be the drivers behind changes in trade growth. What might a look at more detailed seaborne trends add to the argument?

So, What’s The Argument?

One element of the debate has been whether the slowdown in the rate of trade growth, or at least the apparent reduction of the multiplier over global GDP growth (the so-called ‘trade beta’), has been the result of structural shifts in the emerging economies or if it is more closely related to the current sluggish performance of developed economies. Theorists suggest that the former would have a longer-term dampening effect on trade growth, whilst the latter would indicate something, that whilst still a highly negative impact, may improve with time.

Seaborne trade data could help to shine some light on the argument. The red line on the graph shows the 3mma of y-o-y growth in a basket of imports to developing nations (see notes). In 2014, imports rose 7.4%, but growth slowed to 0.5% in 2015 with China’s coal imports falling and iron ore imports growing more slowly. But China’s imports are far from stuck in the doldrums, and growth in the developing world imports featured here has bounced back to a robust 6.3% so far this year. On this basis, even with China’s economy maturing, it does not seem that trade into developing economies is settling into a period of uninterrupted weaker growth.

Gone West?

But what about the western world? Well, trends in North American and European consumer imports could be a useful indicator. Growth in container trade into Europe and North America averaged 4.5% in 2014, but slowed to 2.1% in 2015, with European imports falling. In 2016 so far, growth has picked up slightly (to 2.9%), but has still been fairly moderate. Maybe this supports the view that the more notable brake on trade growth is from soft developed world demand rather than sustained shifts in the developing world?

Wider Trends

But, in reality, there are other trends in seaborne trade to take into account. For instance, growth in the energy and construction industries in some developed nations has been subdued, and European coal and iron ore imports have fallen. Box trade into some developing nations has come under pressure from low commodity prices. Supply disruptions in exporting nations have also impacted trade, especially in crude oil and minor bulks.

So, global trade growth is not in its prime, and there is debate over the relative impact of developed and developing world trends and their implications for the longer-term. At a glance, seaborne trade data might seem to point towards a bigger issue with western demand than with developing world imports. This is still painful, but the cycle might turn. But seaborne trade highlights that there are a range of other factors at play too. As ever, it is not simple, but as usual seaborne trade trends tell us something about the big debates. Have a nice day.

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