The Transpacific trade is heavily tied to the trade war, which is currently in one of its more peaceful settings but is still liable to sour at any moment, according to shipping consultancy Drewry.
It has been a tough year so far for carriers in the Asia-West Coast North America container trade. The unpredictable trade war between the U.S. and China that last year provided a welcome boost to the eastbound market has this year had the reverse effect.
Last year’s annual growth rate of 5.7% was artificially stimulated by the dispute and was always likely to regress, but the extent to which growth has contracted has forced lines to recalibrate their products, Drewry explained.
After eight months, loaded traffic from Asia to WCNA, covering the U.S., Canada and Mexico, had shrunk by nearly 3%. The slack was at least picked up by the smaller Asia to East Coast North America route, which increased by almost 6% to produce a flat total net result for the year-to-date period.
“The extraordinary environment in which the Transpacific currently has to operate makes it hard to properly evaluate the trading performance. Is flattish growth actually a decent result in the circumstances, or could more have been expected?”
Drewry sees reasons to believe that stronger growth will return in the not too distant future. The Transpacific has thus far managed to avoid significant contraction thanks to a combination of factors, including a weakening of the Chinese currency, willingness from some Chinese exporters and American importers to absorb some of the additional costs arising from the new tariffs and some trade substitution within Asia. Countries such as Vietnam, Taiwan, Thailand, and Malaysia have all stepped up trade with the U.S. to counter lost Chinese exports.
“Ultimately, what gives us confidence in the longer-term prospects for the Transpacific is the underlying strength of the US economy that hasn’t been derailed by the Washington and Beijing shenanigans and has continued to create jobs and raise incomes throughout,” Drewry said.