How the trade war might benefit shipping
Escalating trade hostilities between the US and China spells bad news for the Transpacific container trade but should also result in higher volumes of intermediate goods.
The article below is an adapted extract from Drewry’s forthcoming Container Forecaster report.
When it comes to trade, any dispute between two countries, particularly when it is between the world’s two largest economies, has far wider ripple effects. Numerous countries and industries are involved at some stage of the supply chain to make sure the finished product ends up in a store on 5th Avenue in New York, even if customs only logs the last point of origin.
The fragmentation of production that really took off this century thanks to advances in technology and China’s ascension has been a massive boost to container shipping. The movement of intermediate items necessary to the make the final product account for over half of world trade in goods, according to the OECD (see Figure 1). More fragmentation means more need for transportation services and vice versa.