Continued expansion confounds sceptics who thought lines had misjudged

demand, writes Janet Porter- Thursday August 17 2006

 

CHINESE exports continue to expand at a breathtaking rate, confounding

sceptics who thought shipping lines had misjudged demand growth when

ordering new tonnage.

 

New figures from Piers, the US intelligence gathering service owned by the

Journal of Commerce, show that container traffic is still growing strongly,

powered largely by China's economic performance.

 

Exports hit a new record in June, with growth of 23% over the corresponding

2005 figure.

 

But China is not the only country to hearten container line bosses as they

look nervously at a possible downturn in the US. "The Japanese expansion

has strengthened and growth in the Euro area is rapidly improving," Piers

notes in the summer edition of Trade Horizons.

 

"At the same time, economic activity in non-Japan Asia continues to be

vigorous, with booming growth in China accelerating further from an already

heady pace, while India keeps rolling along."

 

Russia is another country where trade is growing briskly, while some of the

big economies in Latin America are also doing better.

 

Even on the eastbound transpacific route, the world's largest trade lane,

conditions look healthy. Growth in containerised cargo may be slowing a

little after expanding 13.4% in 2005, but Piers is still forecasting an

increase of 9.9% this year followed by 8.4% in 2007 and 7.2% in 2008.

 

That would bring the total volume of US containerised imports across the

Pacific to 16.5m teu, compared with 12.9m teu last year and 9.9m teu in 2003.

 

For US containerised imports westbound across the Atlantic, Piers is

projecting 4.5% growth this year, up from 2.2% in 2005. Total volume is

expected to be 3.2m teu in 2008 against 2.8m teu in 2005.

 

Piers is estimating a drop in the growth rate for northeast Asia to the US

to 10.5% from 14.4% in 2005, followed by a further slowing in 2007 and 2008.

 

Nevertheless, total containerised shipments that year are still expected to

reach 13.6m teu, almost double the number for 2003. Total US containerised

imports are forecast to grow by 8.8% this year to 19.2m teu, climbing to

20.6m teu next year and almost 22m teu in 2008.

 

Piers notes that key risks to the outlook are higher energy prices, the

huge trade gap which could trigger a dollar crisis, the possibility of a

collapse in US house prices and tighter monetary conditions, as well as

geopolitical tensions.

 

Nevertheless, it comments that prospects for global growth "remain

favourable as the overall global monetary stance is still accommodative

outside of the US".