One of the underlying issues behind the weak performance of a string of logistics markets has been disappointing trade growth. Container shipping, air freight and freight forwarding have suffered from limp demand. It is not that there is no growth, rather it is that the growth rate is so low and appears not to have fulfilled the potential of recovery that was promised earlier in the year.
This has been confirmed by the World Trade Organisation (WTO) which said that the growth of global merchandise trade has been less than it expected over the first half of the year. Activity shrank by 1.1% in the first quarter and saw only a modest rebound of 0.3% in the second. The WTO commented that “for the year-to-date, world trade has been essentially flat, with the average of exports and imports in Q1 and Q2 declining 0.3% relative to last year”.
The reasons behind this situation included a fall in imports from resource exporting regions and falling imports in Asia, possibly linked to concerns about the Chinese economy.
The WTO does suggest that the second half of the year may be improving as “there are some indications that trade may be picking up in the second half of 2016, although the pace of expansion is likely to remain subdued. Container port throughput has increased, export orders have risen in the US, and nominal trade flows in US dollar terms have stabilized”. However, the overall note is one of pessimism leading the organisation to revise down its forecasts for the next 18 months.
Overall the WTO said that it now expected that world trade will grow by 1.7% in 2016, below the forecast it made in April of 2.8%.
For 2017 it expects a growth rate of 1.8%-3.1% compared once more to the forecast of 3.6% it made in April. This would represent the “slowest pace of trade growth and output growth since the financial crisis of 2009”.
Source: Transport Intelligence, September 29, 2016
Author: Thomas Cullen