Trending Now

New Articles

Globalization Resilient Amid Geopolitical Strains, DHL Tracker Reveals

DHL global trade globalization
Global Trade Daily, International Trade, News

Globalization Resilient Amid Geopolitical Strains, DHL Tracker Reveals

Leave a comment

DHL and New York University’s Stern School of Business have unveiled the latest DHL Global Connectedness Tracker, offering an in-depth analysis of globalization’s current state. Despite mounting geopolitical tensions and uncertainties, globalization remains near record-high levels, reinforcing the resilience of international trade and economic integration.

Read also: Supply Chain: The Twilight Of Hyper-Globalization

Key Insights from the Tracker

The DHL Global Connectedness Tracker, an extension of the established DHL Global Connectedness Report, measures cross-border flows of trade, capital, information, and people. Its current score of 25% underscores that while globalization is at a historical peak, the world remains far from being entirely interconnected.

The new tool allows users to explore trends by region, geopolitical alignment, or individual countries, with data and chart downloads enabling detailed offline analysis.

Global Trade: A Cornerstone of Economic Stability

Global trade continues to drive the world economy. In 2023, 21% of global goods and services were traded internationally, nearing the all-time high of 22%. John Pearson, CEO of DHL Express, emphasized that despite a complex global landscape, the benefits of international trade remain robust, empowering individuals, businesses, and nations alike.

Shifting Trade Dynamics Amid Geopolitical Rivalries

While trade between the U.S. and China has declined—dropping from 3.5% of global goods trade in 2016 to 2.6% in 2024—countries unaligned with either superpower are seeing increased trade shares. These nations, including the UAE, India, Vietnam, Brazil, and Mexico, are emerging as critical connectors in global commerce, bridging geopolitical divides.

The share of trade involving such “unaligned” countries rose from 42% in 2016 to 47% in 2024, highlighting their growing influence in shaping global trade flows.

Resilience Against Protectionism and Regionalization

Despite speculation about potential U.S. tariffs and a broader shift towards regionalization, the data paints a different picture. Goods are traveling greater distances than ever, with the average traded distance reaching a record 4,970 kilometers in early 2024. The share of intra-regional goods trade has also fallen to a historic low of 51%, debunking claims of widespread regionalization.

Future of Globalization: Opportunities and Challenges

Steven A. Altman, Director of the DHL Initiative on Globalization at NYU Stern, highlighted the importance of relying on data to navigate globalization’s trajectory amid uncertainties. He noted that international flows have consistently adapted and remained resilient, with companies and countries finding innovative ways to sustain the benefits of globalization.

About the Tracker

The DHL Global Connectedness Tracker, regularly updated since its inception in 2011, analyzes over eight million data points to provide the most comprehensive insights into globalization. The November 2024 update introduces user-friendly tools for examining and visualizing globalization trends, offering an indispensable resource for policymakers, businesses, and researchers.

global trade maersk xeneta
3pls, Global Logistics, Global Trade Daily, News, Ocean Ports

Xeneta Forecasts Another Tough Year for Container Shipping as Geopolitical Tensions Rise

Leave a comment

The 2025 Ocean Outlook report from Xeneta signals a challenging year ahead for container shipping, warning of heightened geopolitical risks that could disrupt global supply chains. “The lights are flashing red on the geopolitical dashboard, and it would be foolish to ignore them,” Xeneta cautions.

Read also: Port Strikes on US East Coast will Cause Major Supply Disruption into 2025

If 2024 was marked by conflict in the Red Sea, similar threats could persist in 2025, with no sign of stability that would allow the safe return of container vessels to the region. Detours around Africa have stretched TEU-mile demand, and while new ships and slower growth in TEU volume may help ease some pressure, they won’t compensate for another major disruption. Geopolitical concerns range from the possibility of conflict escalation in the Taiwan Strait to potential unrest in Bangladesh and worsening conditions in the Middle East, particularly around the Persian Gulf.

Key Market Trends in 2025

Xeneta notes that spot rates have softened from their July peak as the long-term market trends upward. This narrowing gap between spot and long-term rates will be critical as contract negotiations for 2025 approach. While shippers hope for further narrowing, carriers aim to keep spot rates elevated to secure favorable terms.

Demand for container shipping is projected to grow by three percent in 2025, down slightly from the 4-5 percent growth in 2024, which will break the 180 million TEU mark. Trade from China to Mexico, however, continues to soar, driven by tensions between China and the U.S. and Mexico’s role as a “backdoor” for avoiding U.S. tariffs. Year-to-date, TEU demand between China and Mexico has surged 22.1 percent compared to 2023, following a 34.6 percent jump in 2023. Demand is also up between China and the Middle East, where volumes have risen 52 percent since 2021.

Influence of U.S. Elections and Shifting Alliances

The 2024 U.S. Presidential election could reshape the container shipping landscape, with potential new tariffs on Chinese imports prompting shippers to reconsider supply chain routes and possibly increase imports from Mexico. “2024 saw heavy frontloading of cargoes and extended sailing distances, which could change in 2025, presenting a risk to demand unless conditions become even more volatile,” says Peter Sand, Chief Analyst at Xeneta.

Shifts in shipping alliances will impact network choices in 2025, with OCEAN Alliance, Gemini, and Premier Alliance all adjusting routes and port calls. For instance, MSC is expected to dominate Far East–Antwerp routes with four weekly calls, compared to one from Premier Alliance and none from Gemini. Shippers may need to reassess their carrier choices based on cost, reliability, and port access, and Sand advises them to keep options open and hold carriers accountable for service quality.

After a turbulent 2024, shippers are hoping for smoother seas in 2025. However, Xeneta urges caution, warning them to stay prepared for further disruptions and challenges in the year ahead.

corporate global trade wto world trade organization sectors
Global Logistics, Global Trade Daily, International Trade, News

Rising Shipping Costs Strain Global Trade Amid Geopolitical Unrest

Leave a comment

Global trade is under immense strain as rising shipping costs and geopolitical events create significant challenges. The importance of the Red Sea shipping route cannot be overstated, but for over six months, Houthi militias from Yemen have been targeting ships in the region due to their ties to Israel. These attacks coincide with Israel’s ongoing conflict with Hamas in Gaza.

Read also: Container Rates Surge Amid The Red Sea Crisis

For example, on June 20, the Houthis sank a coal ship with a drone strike, citing their support for the Palestinian cause. In response, US and British military vessels have targeted militia positions in Yemen, and international coalitions, including the EU’s naval mission Aspides, are working to secure maritime traffic.

Escalating Shipping Costs

The conflict has led to higher freight costs and increased expenses for insuring commercial trade goods. The risk of losing a vessel, especially in the Red Sea, has caused shipowners to face higher insurance premiums. Additionally, many are avoiding the Suez Canal for safety reasons, opting instead to navigate around the Cape of Good Hope, which increases travel times and fuel consumption.

The Drewry World Container Index reported a 7% increase in shipping prices for a 40-foot container within the third week of June, marking a 233% rise compared to the same time last year.

Adapting to New Routes

Simon MacAdam, an analyst at Capital Economics, noted that shipping companies are adapting by finding new routes. However, costs are rising again as importers move up orders to ensure sufficient stock throughout the year, exacerbating price spikes.

Increased Demand for Ships

Jan Hoffmann, a trade expert at UNCTAD, explained that longer travel routes require more ships to maintain supply. The average travel distance for a container in 2024 is 9% longer than in 2022, necessitating more vessels and personnel, which drives up freight prices. Additionally, increased shipping speeds are leading to higher greenhouse gas emissions.

Challenges in the Panama Canal

In Central America, low water levels in the Panama Canal are limiting its use. This has forced US shippers to integrate a “land bridge” into their sea routes, transporting goods across the US by rail or road. For bulk commodities like wheat or liquefied natural gas, this is economically unviable, leaving shippers with no choice but to take the long and dangerous route around Cape Horn.

Future Outlook

While there is some hope for the Panama Canal as water levels have slightly recovered and the La Niña weather phenomenon could ease the situation further, the Red Sea remains a dangerous route. Around 70% of trade in the region is being rerouted around Africa. Prolonged disruptions could overwhelm shipping companies and further increase freight rates, as building new ships takes years and higher capacities cannot be achieved overnight.

The ongoing geopolitical tensions and their impact on global trade highlight the fragility of international supply chains and the need for adaptive strategies to navigate these turbulent times.

commodity global trade
Global Trade Daily, International Trade, News

Global Commodity Prices Plateau, Threatening Inflation Targets Amid Geopolitical Tensions

Leave a comment

Global commodity prices, which sharply declined last year contributing to a reduction in global inflation, have now stabilized, posing challenges for central banks aiming to lower interest rates swiftly. The World Bank’s latest Commodity Markets Outlook also warns that escalating conflict in the Middle East could disrupt this trend, potentially driving inflation upwards.

Between mid-2022 and mid-2023, commodity prices dropped nearly 40%, significantly impacting global inflation. However, since mid-2023, the World Bank’s commodity price index has remained relatively stagnant. Forecasting suggests a marginal decline of 3% in 2024 and 4% in 2025, insufficient to curb inflation still above central bank targets in many countries.

Indermit Gill, Chief Economist of the World Bank Group, highlights that falling commodity prices, a key factor in reducing inflation, have reached a plateau. This could lead to prolonged higher interest rates, especially if geopolitical tensions escalate, potentially triggering a major energy shock.

Geopolitical tensions have kept oil prices elevated despite sluggish global growth, with Brent crude reaching $91 per barrel, well above pre-pandemic averages. Further escalation in the Middle East conflict could disrupt oil supplies, raising global inflation significantly.

Ayhan Kose, Deputy Chief Economist of the World Bank Group, emphasizes the divergence between global growth and commodity prices, attributing it to heightened geopolitical tensions. Central banks are advised to monitor inflationary risks associated with commodity price spikes amidst geopolitical uncertainties.

The report predicts record-high gold prices in 2024 due to increased demand amid geopolitical and policy uncertainties. Additionally, a Middle East conflict could drive up prices of natural gas, fertilizers, and food, impacting global markets.

Investment in green technologies has also influenced metal prices essential for clean energy transition, with copper and aluminum prices expected to rise in the coming years.

Lastly, the report evaluates various approaches to commodity price forecasting, emphasizing the importance of incorporating diverse analytical methods for accurate predictions.