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April 29 2019

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4 The Journal of Commerce | April 29 2019 www.joc.com Mark Szakonyi Letter From the Editor IT'S HARDLY A five-alarm fire and more of a slow-burn, but a new pressure on the container shipping industry is solidifying: Slowing global trade with no end in sight. The World Trade Organization (WTO) on April 2 downgraded its 2019 outlook for world trade growth to 2.6 percent from a 3 percent clip in 2018; global manufacturing is weakening; and there's little sense that rising pro- tectionism will recede. Granted, con- tainer volume growth tends to outpace the expansion of the value of trade by 1 to 2 percentage points, but both are flattening. Container trade will grow 5.2 percent this year and 4 to 5.1 per- cent in the medium-term, according to IHS Markit's Shipping and Shipbuild- ing 2019 outlook. Noting that the range of growth is a major change compared to the early 2000s when growth rates cleared dou- ble-digits, Daibor Gogic, the report's author, said, "We must accept that globalization appears to have worked its way through the global sourcing system and that we are now back to de- pending on straightforward demand." In a catchier turn of phrase, Adjiedj Bakas, a so-called futurologist and author, has dubbed the new era "slowbalization." The regionalization of trade paral- lels and is intertwined with a slowing global economy. The International Monetary Fund predicts for 2019 the slowest global economic expansion since 2016, at 3.3 percent. Global pro- duction in March stalled like it did in February, recording the weakest level since mid-2016 on the J.P. Morgan Global Manufacturing Index. Global trade will accelerate to 3 percent growth in 2020, according to the WTO, hinging its brighter outlook on "an easing of the trade tensions." But even if the US and China reach a truce, as the latest bub- bling of optimism suggests, the global mood of protectionism won't change course easily or soon. Although much has been made about what the slowing value of trade means for cross-border trade and the shift of trade agreements from multilateral to bilateral, the impact of container shipping has yet to be fully explored, much less realized. But there are signs of an industry — whether conscious or not — shifting into a new landscape of mild to mod- erate growth. Maersk's and CMA CGM's efforts to evolve into integrators, along with the most concerted push by container lines as a whole to deepen their reach via technology and landside opera- tions, is evidence of this. With slower freight growth ahead, carriers want a larger part of whatever revenue might be available. In this new era of trade, volume growth may slow globally, but regional trade growth is set to accelerate, most notably in intra-Asia. Seeing the writ- ing on the wall and the healthier mar- gins regional services can deliver, major global container lines have been acquiring regional lines — whether it be Maersk's acquisition of Hamburg Sud and Sealand, or CMA CGM's pur- chase of Containerships. Container lines' efforts to deepen their reach into the supply chain is something forwarders such as DB Schenker are watching closely. "From a forwarder perspective, we have amplified our efforts to add value via flexibility, reliability and technology," said Jeffery Barrie, CEO, USA for DB Schenker. Just as carriers look to add value, he said other asset providers in the supply chain are doing the same and considering more "what's in those containers, and is there value-add potential?" JOC The new trade reality The Journal of Commerce The Journal of Commerce (USPS 279 – 060), ISSN 1530-7557, April 29, 2019, Volume 20, Issue No. 9. The Journal of Commerce is published bi-weekly except the last week in December (printed 25 times per year) by JOC Group Inc., 450 West 33rd St., 5th Floor, New York, N.Y. 10001. Subscription price: $595 a year. Periodicals postage paid at New York, N.Y., and additional mailing offices. © All rights reserved. No portion of this publication may be copied or reprinted without written permission from the publisher. POSTMASTER: Please send address changes to The Journal of Commerce, Subscription Services Department, 450 West 33rd St., 5th Floor, New York, N.Y. 10001. Executive Editor, The Journal of Commerce and JOC Events: Chris Brooks 609 649 2181, chris.brooks@ihsmarkit.com Executive Editor, The Journal of Commerce and JOC.com: Mark Szakonyi 202 872 1234, mark.szakonyi@ihsmarkit.com Managing Editor: Benjamin Meyer 916 716 6272 benjamin.meyer@ihsmarkit.com Managing Editor: Barbara Wyker 908 507 4802, barbara.wyker@ihsmarkit.com Senior Editors: William B. Cassidy Trucking and Domestic Transportation 202 872 1228, bill.cassidy@ihsmarkit.com Bill Mongelluzzo West Coast 562 428 5999, bill.mongelluzzo@ihsmarkit.com Hugh Morley Northeast, Mexico 646 679 3475, hugh.morley@ihsmarkit.com Eric Johnson Technology 213 444 9326, eric.johnson@ihsmarkit.com Janet Nodar Breakbulk and Heavy Li 251 473 2742, janet.nodar@ihsmarkit.com Greg Knowler Europe +44 7976798770, greg.knowler@ihsmarkit.com Turloch Mooney Global Ports +852 9011 9109, turloch.mooney@ihsmarkit.com Associate Editor: Ari Ashe Southeast Ports, Intermodal Rail 202 548 7895, ari.ashe@ihsmarkit.com Data Analyst: Marcin Lejk +44 58 741 62 70, marcin.lejk@ihsmarkit.com Shipper Engagement Manager: Dustin Braden 646 679 3450, dustin.braden@ihsmarkit.com Senior Content Editor: Alessandra Gregory Barrett, 860 248 5238 alessandra.barrett@ihsmarkit.com Senior Designer: Sue Abt, 862 371 3534, sue.abt@ihsmarkit.com Designer: Bryan Boyd, 908 910 7849, bryan.boyd@ihsmarkit.com Publisher: Tony Stein, 770 295 8809, tony.stein@ihsmarkit.com Sales: Cindy Cronin, Strategic Account Manager Southeast, Gulf, Canada sales, 954 260 6061 Jean Gibbons, Senior Sales Executive West Coast, Midwest sales, 706 469 7160 John Knowles, Senior Sales Executive Europe sales, +44 7779 974677 Allyson Marek, Senior Sales Executive Northeast sales, 862 754 8012 Alex Remstein, Associate Sales Specialist Reprints/Classifieds/Copyrights, 646 679 3418 For Magazine Subscription Customer Service: www.joc.com/help 450 West 33rd St., 5th Floor, New York, N.Y. 10001 800 952 3839 Executive Director, Editorial Content, Maritime & Trade, IHS Markit, Peter Tirschwell Executive Director, Media & Events, Maritime & Trade, IHS Markit, Amy Middlebrook Manager, Production, Carmen Verenna Product Manager, JOC, Jesse Case ©2019 The Journal of Commerce — All Rights Reserved For more information, visit our website, www.joc.com. There are signs of an industry — whether conscious or not — shiing into a new landscape of mild to moderate growth.

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