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May 28 2018

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May 28 2018 | The Journal of Commerce 11 www.joc.com Cover Story JOC Top Importers and Exporters SHIPPERS SHARE TWO major chal- lenges this year that make the out- look for those on the JOC's Top 100 Importers and Exporters and smaller beneficial cargo owners (BCOs) more potentially fraught than usual. For one, they are being forced to plan in the midst of global trade policy uncertainty. And second, they are dealing with highly asymmet- rical market conditions between international and domestic trans- portation modes. On the trade policy side, the United States' posture toward tari†s on steel and aluminum imports has created an environment where vir- tually every importer and exporter has to consider the impact to their business of a possible tit-for-tat trade skirmish. And on the freight side, the exceedingly tight North American surface transportation market is at odds with the relatively slack ocean freight market. Both dynamics are always in the background for logistics practi- tioners, but the degree to which they are heightened this year isn't so typical, and a source of pronounced consternation for international shippers. Yet while uncertainty lingers, it hasn't had a major impact on trade volumes; in fact, it may be stirring some unexpected early container- ized growth. "The threat to impose up to $150 billion in US import tari†s on Chinese exports still stands (as does China's threatened retaliation in kind) but those tari†s are still pend- ing," analyst Paul Bingham wrote in Hackett Associates' Global Port Tracker report this month. "Some- what ironically, overall commodity trade volumes, including US imports, have increased, likely as a response to trade threats. Market psychology regarding potential future additional tari†s has a†ected trade behavior quickly, not surprisingly. Following By Eric Johnson the US trade policy announcements this year it appears some companies have accelerated shipments." Hackett Associates is projecting North American containerized trade volume for 2018 to rise 5.3 percent to 24.7 million TEU. That's roughly in line with the 4.9 percent growth in containerized trade for 2018 forecast in January by IHS Markit, parent company of The Journal of Commerce. Maritime consultant Drewry recently pegged supply growth in the container shipping industry at 4.2 percent this year. The US tari†s on $50 billion of imports from China and Chi- nese retaliation threaten roughly 887,000 TEU, or 6.6 percent of the total US container trade with China and 2.5 percent of total US container volume, according to a JOC analysis of PIERS data, though the ultimate impact of the threatened tari†s remains unclear. The threats have alarmed global and US economy watchers, and raised suspicions that China is trying to squeeze US exporters of waste, pork, and fresh fruits with ramped- up container inspections. Before the JOC went to press, the Trump administation was hinting it would ease sanctions on ZTE, a Chinese telecommuniations company that has drawn the scrutiny of some in the US security community, in exhange for China's removal of tar- i†s on US agriculture exports. Amid the back-and-forth, the major economic forces still look strong. Nariman Behravesh, chief economist at IHS Markit, said growth in the world economy will likely be sustained between 3 and 3.5 percent over the next cou- ple of years. There's more tempered growth projected for US GDP, at 2.8 percent for 2018 and 2019. "The reality is that the business cycles of the world's major economies

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