The rate of expansion of global trade appears to have declined sharply over the first half of the year if key indicators are to be believed. It is unclear why and what impact such a slowdown will have for the second half of the year.
The German RWI/ISL Index which tracks container port throughput suggests that if seasonally adjusted, container port volumes have fallen back since the beginning of 2018. The German institute described the numbers as suggesting that “world trade is stagnating”.
The situation in airfreight appears better, with seasonally adjusted FTK levels picking up slightly in H1 2018 compared to the start of the year, though it is nothing like the pickup that was observed in H1 2017.
The Dutch CPB Institute’s trade numbers support these other statistics, stating that seasonally adjusted world trade volumes fell in June by 0.8% month-on-month, while growth was 0% quarter-on-quarter. Trade volumes have essentially flatlined in 2018.
Unfortunately, LSP data does not offer similar insights given that it is not seasonally adjusted. Looking at the year-on-year numbers from the likes of Maersk or Hapag Lloyd, demand for container traffic appears to be moderately strong with rising throughput in both the terminal and shipping businesses. This more or less matches the solid year-on-year global trade data. Airlines such as Lufthansa and AirFranceKLM have reported that cargo factors and revenue have been falling in Q1 and Q2 this year.
Overall, what do the numbers from IATA and the rest mean? After all, it is somewhat perplexing that at a time when the US economy is growing at an impressive rate that world trade should appear to be “stagnating”. Looking at the IATA numbers, it seems that production activity in China and parts of Asia Pacific has been muted, but why this should be so is not clear. There has been speculation that trade tensions have damaged trade, though the extent of this is again unclear. Cyclical factors around inventory possibly played a greater role, with production slowing to adjust to lower demand. However, if this is so why has sea freight been hit harder than air freight? With such uncertainty, it is hard to be confident about a pickup in trade volumes in the second half of the year.
Source: Transport Intelligence, August 30, 2018
Author: Thomas Cullen
