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Jan.12, 2015

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48 THE JOURNAL OF COMMERCE JANUARY 12.2015 MARITIME 2015 ANNUAL REVIEW & OUTLOOK I N P E R S P E CT I V E India's economy has offered some relief, with fi scal 2014 growth reaching 4.5 per- cent, but the country is too small in relative terms to have more than a minimal impact. As for the U.S. dollar, the real exchange rate has formed another signifi cant barrier for U.S. exporters. As nominal rates of exchange continue to favor the dollar over other major currencies, reduced economic growth in most of the rest of the world has pushed external price growth down relative to domestic prices. Thus, in real terms the U.S. dollar has favored imports over exports, and this trend is likely to continue through 2015. Partially as a consequence of less favor- able exchange rates, export prices have been rising steadily since early 2010, an average of 0.5 percent per quarter. Part of this can be attributed to supply challenges in the U.S. for key agricultural commodities, but the rising value of the dollar also is responsible for a large proportion of the increase. Globa l economic condit ions have deteriorated despite the improving perfor- mance of the U.S. economy. Conditions are such that the International Monetary Fund has downgraded its projection for global growth with a particular eye toward the fl agging performance of the Chinese and European economies. And, after a brief surge in growth during last year's second quarter, conditions in Japan have again worsened enough for authorities there to consider easing monetary policy. Chinese monetary authorities are following suit, though the extent of easing isn't clear. In Europe, the hawkish European Central Bank is reluctant to ease, though it's inevitable that at least a symbolic move must occur. In the meantime, plunging global energy prices could offer relief to consumers world- wide, but the psychological impact of falling prices in this sector actually may be nega- tive because of the defl ationary fears they're stoking. Further, in Russia and other oil- dependent economies, the dramatic decline in prices already has slashed investment out- looks, which will in turn reduce hiring and expansion of the labor market. None of these conditions are good for export-favorable exchange rates. Global investors are looking to the U.S. dollar for safe haven, which is putting upward pres- sure on the exchange rate, while relative prices favor U.S. imports over exports. I expect these conditions to prevail for most of 2015, and my forecast for outbound container trade refl ects a negative sentiment as a result. U.S. shipments of container- ized goods will slip 0.1 percent in 2015, to 12.0 million TEUs, after a 2.0 percent decline in 2014. I anticipate modest growth to return in 2016 once the global economy responds to looser monetary policy in Europe and Asia. Downside risks to the forecast include an even sharper appreciation of the U.S. dollar that could result from an inten- sification of current global conf licts. In particular, I am concerned about ongoing turmoil in the Middle East and am watch- ing for the conf lict to widen. In eastern Europe, the Ukraine crisis threatens Euro- pean economic growth and could impact the U.S. exchange rate. Finally, I am con- cerned that global monetary easing may not be suffi cient to ward off what may become a global recession. Although the odds of such an occurrence are slim, it remains a possibility, in which case U.S. exports will plunge 5 to 10 percent below my current projection. JOC Mario Moreno is the economist for JOC Group Inc. Contact him at Source: JOC Container Shipping Outlook, December 2014 U.S. CO N TA I N E R I Z E D O C E A N T RA D E Year-over-year percentage change in U.S. imports and exports. -20% -15% -10% -5% 0% 5% 10% 15% 2015 2014 2013 2012 2011 2010 2009 ● U.S. Imports ● U.S. Exports FORECAST

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