The shipping industry is subjected to changes in the world trade and economy and is always going through ups and downs. Let us see how 2019 will treat the industry - will it be a success or a failure?
Drewry Predicts That 2019 Will Be Profitable For The Shipping Industry
Drewry is a well-established maritime insight and intelligence provider that has carved out a special niche in the maritime industry. According to the predictions put forward by Drewry, the container terminal sector will undergo improvement on a large scale and the global throughput is likely to cross the 800 million TEU mark.
But we should consider the fact that this prediction is greatly dependent on the maritime industry being subjected to numerous, inevitable obstacles, such as the Brexit and the US-China trade war. The Senior Analyst for Ports and Terminals in Drewry, Mr Neil Davidson, is of the opinion that though it is tough to estimate the ending of the trade war, it has definitely encouraged the active participation of several nations in the Pacific region. Mr, Davidson thinks that the US-China trade war is here to stay in 2019, for better or for worse. He believes that there are fair chances of the war becoming more severe or cooling down to a great effect with the help of a peaceful agreement.
Throwing light on this complex issue, Mr Davidson has said that the U.S. is leaning in favour of protectionism while most of the countries are growing more interested in trade accords. He has also highlighted the start of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which will signify the joint collaboration among several economies in the Pacific rim, like New Zealand, Japan, Chile, Mexico, Brunei, Australia, Canada, Peru, Singapore, Vietnam, and Malaysia.
Now, Japan is much more open to free trade than it used to be earlier. On the other hand, China has signed free trade agreements with around 21 countries. Mr Davidson is confident of the fact that cascading is the worst difficulty that the shipping industry has to face in the coming years. Probing into the matter of vessel cascading, it has been predicted that a few of the main trade routes will experience the addition of loops of larger vessel sizes, which will worsen the situation of volume peaks and make it even more tough for the ports and terminals.
Why 2018 Was A Strong Year For The Global Economy?
In the most recent gKNi World Trade Indicator Report, Kuehne + Nagel has focused on how the global economy has delivered a commendable performance in 2018 and was only lagging behind by 0.2% from the figures calculated in 2017. Back in 2016, the global trade had suffered a loss and came down to 3.3%. The last year turned out to be a prosperous one for the maritime industry because the sea freight had grown by 2.9%. According to the report, December 2018 was the best month for world trade and it increased by 1.7% year-on-year (YoY). Latin America was credited as the region that delivered the strongest performance as its foreign trade was steadily rising by 9.5% year-on-year.
The December month was also a boon to the emerging markets across the world as it underwent a growth of 4.5%. Coming to the advanced economies like North America, an overall growth of 2.8% was registered that is almost half of the growth figures in 2017. The export nations that were much-appreciated for their good performances are Brazil, Australia and Sweden. Kuehne + Nagel has also hinted at a decrease in export rates from countries like Korea, Taiwan and Japan in January of 2019.
The World Bank Warns About The Devastating Effect Of The US-China Trade War
The World Bank has released a report on the global economy and has forecasted that global economy is going to suffer in 2019 with the growth not crossing the 2.9% mark. Moreover, the US-China trade war can lead to dire consequences. The World Bank has named the report as the ‘Global Economic Prospects - Darkening Skies’ where the future growth is predicted to be much slower than earlier because of the softening of manufacturing numbers and the growing tensions in the matters of trade. The increasing borrowing prices, decreasing external demand, and policy uncertainty are reasons enough to slow down the growth factor in the emerging economies. In the case of advanced economies, it is predicted that the growth will drop by 2% in 2019. Due to US-China trade war and the decline in export growth and production, China’s economy is greatly affected.
Coming to the scenario in the US, the World Bank is certain that its economy will reduce from 2.9% to 2.5% and the “major downside to the global outlook” is to blame. The report has highlighted that this trade diversion could actually prove to be beneficial to a few nations, but the growing trade diversion could seriously interfere with the global value chains and eventually lead to much higher costs and unsatisfactory production. The CEO of the esteemed organization, Kristalina Georgieva, has reinstated the fact the global economy was “firing on all cylinders” during the beginning of 2018 but it lost its momentum and is now prepared for a “bumpier ride” in 2019. Kristalina believes that the countries should invest more in people, enhance the inclusive growth and create resilient societies in order to combat the unfortunate circumstances.
We look forward to what is going to happen in 2019 and we hope for the best. Click here to know what trends we foresee in 2019.