China Slowdown Means Fewer Container Shipments Globally
China’s economy is projected to grow through 2016 at a clip most countries only dream of. But the combination of dipping growth rates and China’s large share in global container moves, has prompted Drewry, the London-based shipping consultancy, to downgrade its outlook for China, and consequently, world container traffic.
The International Monetary Fund forecasts that China’s GDP will grow at a 6.8-percent rate this year and 6.3 percent in 2016. These figures compare to 7.7 percent in 2013, 9.5 percent in 2011, and 10.6 percent in 2010.
Greater China (including Hong Kong) represent 30 percent of all container moves in the world, having nearly doubled its share since China joined the World Trade Organization (WTO) in 2001.
“With such a large piece of the pie, the direction of the Chinese economy has a huge bearing on world port throughput growth,” noted Drewry.
Chinese policy makers have been attempting to rebalance the economy and drive growth from services and consumption and less from investment. That dislocation has been felt in the commodities markets and many dry-bulk carriers missed the fall off in demand for commodities such as iron ore, coal, and oil.
Drewry estimates that a slowdown in the growth of Chinese container imports has led to a static overall growth picture. China container imports grew by only 1.6 percent last year, the consultants believe, while exports rose by 9.1 percent. “The net effect was that total volume growth was unchanged at 5.6 percent,” the Drewry report said.
WTO data suggests that China’s merchandise imports were down by 15.5 percent in the first six months of 2015, while merchandise exports managed only a modest 1.0-percent increase. Manufacturing data show bare growth levels with some sectors contracting.
Against this backdrop, Drewry has cut its 2015 growth forecast for Greater China port throughput from 5.8 percent to 4.9 percent, which represents a shortfall of approximately 1.85 million TWU, or around one percent of world traffic.
“The risks from a slowdown in Chinese consumption to container shipping…are not inconsiderable,” Drewry concludes, “and will contribute to slowing world box growth.”
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