The container shipping industry is strengthening, in largely due to accelerating global economic growth, trade volumes rising, and robust corporate earnings. Ocean carriers earned $7 billion in 2017, according to Drewry - the first profitable year after six straight years of losses. The consensus among shipping decision makers, analysts, and economists at last week's maritime forum at the New York Metropolitan Club was that the fundamentals are in place for another, substantial increase in container trade in 2018 - provided an absence of global trade war.
Attendees relayed concerns that a tariff induced trade war could potentially ruin the world's first year of 4 percent global growth since the onset of the financial crisis. The Trump administration's abrupt announcement on March 1 of a plan to impose a 25 percent tariff on steel and 10 percent on aluminum, as well as recent Washington chatter of additional US tariffs on China, along with possible retaliation by China, have understandably concerned shippers and others involved in international trade.
Despite these concerns, IHS Markit predicts that global container trade will increase 4.9 percent in 2018, after a healthy 4.7 percent increase in 2017. The data and intelligence company also forecasts a 5.1 percent container trade rise in 2019.
Aggregate demand in two major economic regions, the European Union and the United States, supports the argument that international trade is poised for a substantial rise in 2018, after a solid 2017. In the European Union, GDP growth is above trend. The United States has recorded three consecutive quarters of plus-2.5 percent GDP growth, 3.1 percent, 3.2 percent, and 2.5 percent (Q2 2017 through Q4 2017). IHS Markit forecasts that 2018 global GDP growth will match the 3.2 percent achieved in 2017.
Source: Journal of Commerce