The changing face of shipping in Asia Pacific
Like every element of today’s global economy, strong growth in Asia Pacific is set to have a significant impact on the shipping industry in the region. We’re committed to playing our part in preparing our business and our services so that we can support our customers as they transport their goods in and out of Asia Pacific. So, what are some the trends that are driving these changes?
We know that Asia’s continued integration into the global economy has ultimately contributed very significantly to the growth of global trade. Manufacturing value chains have adapted well to utilising abundant labour, and to serving vast new segments of customers.
According to McKinsey’s report, Container Transport in 2043, trade flows will become more balanced across global trade lanes as incomes converge between East Asia and developed economies, and as emerging economies in South Asia catch up with global averages. The once overly-simplified concept of Asia as a factory for American and European consumers has become outdated. As a result, intra-regional and north-south trades will likely grow faster than traditional east-west trades.
Ongoing digital transformation is also giving many small and medium enterprises in the region the opportunity to sell to a global customer base through e-commerce platforms. To illustrate the potential effects of this, approximately 12% of global goods trade in 2015 was from cross-border e-commerce, and that share is expected to be 22% by 2020.
Over the past 30 years, the economic development of South Korea, Japan, and Singapore has been transformational for their societies and the global economy. However, the scale of China’s economic ascent, has been unlike anything in history. Since 1980, China has made up 20% of global GDP growth, and China’s Belt and Road Initiative is now offering more than US$1 trillion investment in transport and other infrastructure in Asia, Europe, and Africa to enable participating countries to increase their trading capabilities.
In addition to China with its US$17 trillion economy, Asia Pacific growth is also underpinned by India’s US$7 trillion economy and 1.3 billion-person population. These two countries combined represent 25% of global GDP and more than 30% of global good trade.
While the signals of continued growth in Asia Pacific are welcomed, there are also some challenges for maritime shipping in the region including:
- potential oversupply of vessels
- constantly shifting global trade patterns
- talent shortages
- technological disruption
- increasing regulatory burden
The switch to LNG is also causing some long-bow comparisons to the switch from sails to steam, but there is no doubt these changes are seismic. Other major changes have as much to do with what happens above deck as they do below when we consider the ongoing effects of automation and digitalisation.
Against this complex and dynamic backdrop, MSC is committed to continuing our work in preparing our business and our customers for what comes next in the region. As a global leader with a proud history of service in the region, were delighted to win the award for Best Shipping Line – Asia – Europe at the prestigious Asian Freight, Logistics and Supply Chain Awards last year. This award underlines our strong position in the region, and reflects the healthy volume growth of MSC’s services between Asia and Europe.
Source: Global Container Shipping by Caroline Becquart – MSC Asia