Tuesday, September 9, 2014

Drewry: Container growth on Asia-to-Europe trades outpaces economy

Container flows from Asia to Europe came out strong in the first-half of 2014, which is at odds with macro-economic data coming out of Europe, according to this week’s Container Insight from Drewry Maritime Research.

The analysts note that recent disappointing economic news coming out of Europe regarding GDP does not align with the robust growth reported for some of the big ocean container markets.

Eurozone GDP was static in the second quarter, as the economies of its three biggest economies— Germany, France and Italy—faltered. Germany, which accounts for roughly one-third of the entire Eurozone economy, dropped 0.6 percent in the second quarter, due to weaker exports. France posted a 0.1 percent fall, triggering the government to admit it will not reach its annual growth or budget deficit targets. Italy backslid into recession as the economy contracted for the second consecutive quarter, this time falling by 0.8 percent.

In Asia, China experienced strong second quarter GDP growth of 8.2 percent, but the Japanese economy fell by 6.8 percent, its worst performance since the tsunami in 2011.

Even though the above data would suggest a similar drop in the container sector, the first-half growth in the Asia-to-Europe and the Mediterranean (including North Africa) trade routes reached 8 percent year-over-year.

Drewry said although GDP is a broad measure of economic health as one of the drivers of long-term aggregate growth in trade, it is less useful for short-term trade forecasts. GDP also reflects changes in domestic economic activity not related to exports and imports, just as container growth 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.

Also, trade statistics are inclined to large growth swings and year-over-year contrasts can be distorted by a range of factors, from movable national holiday dates in China to shipments being transported early to avoid general rate increases or potential port labor disruptions, as seen recently on the U.S. West Coast.

Drewry concludes the growth experienced in the Asia-Europe trades in the first-half was inflated by weak year-over-year comparisons, yet reports it is also true that the strength of the container volume growth is beyond predictions despite weak GDP economic indicators. The researchers say they expect the rate of container trade growth to slow and for the economy to catch up.



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