Container flows from Asia to Europe made robust growth in the first half of the year, belying the slow recovery of the European market and making a surprising indication that economic growth and ocean box trade activity may not necessarily go hand-in-hand.
Drewry noted that even as the Eurozone’s gross domestic product (GDP) “flat-lined” in the second quarter with its three largest economies Germany, France, and Italy all stuttering, first-half growth in the Asia-to-Europe/Mediterranean/North Africa trade reached 8 percent year-on-year.
Germany, which accounts for roughly one-third of the entire Eurozone economy, contracted at an annualized 0.6 percent in the second quarter, held back by weaker exports, while France reported a 0.1 percent fall. Italy slipped back into recession as the economy contracted for the second quarter in a row, this time falling by 0.8 percent.
From this development, the maritime research group concludes that using only GDP to forecast container flows has its limitations. “As the broadest measure of economic health, GDP is one of the drivers of long-term aggregate growth in trade, but can be a poor guide when making predictions on short-term trade prospects,” it said.
Container traffic growth in the short term is influenced by factors other than GDP, including the multiple physical transport of parts, intermediate goods and finished goods, and the increasing containerization of certain commodities.
“GDP is a lagging indicator and market expectations can affect international trade. If the market expects a recovery, consumers will change their spending habits, which can lead to higher demand and translate to higher international trade, eventually feeding back into economic growth,” said Drewry.
Moreover, it said the approach to data gathering should also be considered. “Monthly, and even quarterly, trade statistics are prone to large growth swings as year-on-year comparisons can be skewed by a range of factors, from movable national holiday dates in China to shipments being brought forward to avoid general rate increases or port labor issues, as seen recently on the U.S. West Coast.”
One way to smooth out the erratic fluctuations, it continued, is to apply a moving average of monthly volumes, as this approach will make it clearer if real growth has been gradually building or not.
Another indicator that can predict short-term volume patterns is retail sales. Drewry noted that consumer spending is rising fastest in the UK, but is only meandering in Germany and across the wider European Union, “indicating that future container growth to the region will remain patchy.”
Another big driver of bilateral container trade is changes to currency exchange rates. With the Chinese yuan weakening against the dollar, euro, and pound sterling, “it is clear that the competitiveness of Chinese goods is not diminishing,” said Drewry, adding that “this probably means that western consumers are buying an increasing volume of Asia-made products, but without spending more money.”
Other good forward-looking indicators include manufacturing industry’s purchasing managers’ indices, the European Commission’s monthly surveys on business confidence and expectations across nations in the region, and other key trade indicators published by market intelligence providers like Drewry.
“Looking at this basket of economic indicators suggests that container traffic between Asia-Europe will continue to rise in the short term, but that growth will be far more modest than seen in the first half of the year,” Drewry predicted.
Photo: Uli Harder
