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Descartes Releases April Global Shipping Report: March U.S. Import Container Volume Continues Strong Trajectory

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Global Logistics, Global Trade Daily, Imports/Exports, International Trade, News, Ocean Ports

Descartes Releases April Global Shipping Report: March U.S. Import Container Volume Continues Strong Trajectory

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Descartes Systems Group, the global leader in uniting logistics-intensive businesses in commerce, released its April Global Shipping Report for logistics and supply chain professionals. In March 2024, U.S. container import volumes increased 0.4% from February, but jumped 15.7% when compared to the same month last year, indicating exceptional growth when considering the impact of the Chinese Lunar New Year on the second half of March.

Compared to February 2024, imports from China continued to decline because of the Chinese Lunar New Year, reflected by a significant volume loss at the Port of Los Angeles for the second consecutive month. Port transit delays continue to improve as the drought in Panama and Middle East conflict have yet to impact East and Gulf Coast ports. April’s update of logistics metrics monitored by Descartes show that the first quarter of 2024 has been a strong start for U.S. container imports; however, concerns around global supply chain performance are still expected throughout the year because of ongoing conditions at the Panama and Suez Canals, upcoming labor negotiations at U.S. South Atlantic and Gulf Coast ports, Middle East conflict, and the impact of the Baltimore Bridge collapse which remains to be fully reflected in U.S. container import volume data.

U.S. container imports maintain year-over-year strength.

March 2024 U.S. container import volumes remained mostly flat from February 2024, increasing only 0.4% to 2,145,341 twenty-foot equivalent units (TEUs) (see Figure 1). Versus March 2023, however, TEU volume was higher by 15.7%, and up 20.6% from pre-pandemic March 2019, demonstrating that year-over-year performance remains strong. The Chinese Lunar New Year may have masked even stronger growth as it occurred on February 11 and the holiday extended the entire week, which means its impact on U.S. imports did not occur until the second half of March 2024. For a more representative view, Descartes compared the first 15 days of March 2024 to the same time period in 2023 as these time periods were less likely to be impacted by the Chinese Lunar New Year. In this timeframe, U.S. container import growth was 22.7%.

Figure 1. U.S. Container Import Volume Year-over-Year Comparison

A graph of different colored linesDescription automatically generated
Source: Descartes Datamyne™

 “Considering declining import volumes from China, March 2024 was a strong month and continues the robust performance that began in January 2024,” said Chris Jones, EVP Industry, Descartes. “Despite the combined effect of the Panama drought and the conflict in the Middle East, port transit delays showed continued improvement across nearly all the top ports, as March volumes at East and Gulf Coast ports remained stable.”

The April report is Descartes’ thirty-second installment since beginning its analysis in August 2021. To read past reports, learn more about the key economic and logistics factors driving the global shipping crisis, and review strategies to help address it in the near-, short- and long-term, visit Descartes’ Global Shipping Resource Center.

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Global Logistics, Global Trade Daily, International Trade

Adapting to Emerging Global Trade Routes

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In the wake of recent geopolitical crises, global trade routes have undergone significant transformations, necessitating a reevaluation of how goods flow along emerging corridors. Traditional routes, such as the northern Eurasian corridors, have experienced declines in freight flows since the onset of the conflict in Ukraine, while the Red Sea crisis has further disrupted east-west trade, prompting a search for alternative routes.

The rise of new trade routes, particularly the Middle and Southern Corridors, has reshaped the dynamics of global transport and trade. These corridors, linking China and Central Asia through the Caspian Sea or Iran to Türkiye and Europe, offer efficient door-to-door road transport options and facilitate the seamless integration of different modes of transportation.

In recent years, the Middle Corridor has witnessed remarkable growth in transit volumes, with a staggering 150% increase compared to the previous year. Similarly, the Southern Corridor has seen significant rises in transport operations, highlighting its role in facilitating trade between Türkiye and Central Asian countries.

The attractiveness of these corridors is underscored by their efficiency, with transport from Lianyungang, China, to Türkiye or EU countries taking significantly less time compared to maritime routes via the Suez Canal.

However, the Red Sea crisis has presented new challenges, necessitating innovative solutions to mitigate disruptions to global trade. Transport companies have begun rerouting shipments through the Gulf Cooperation Council (GCC) region, utilizing the UN TIR system to bypass blocked maritime routes.

Furthermore, the digitalization of trade processes, including the implementation of eTIR, holds immense potential to streamline transit operations and enhance trade security and efficiency. By eliminating paper-based processes and facilitating intermodal transport, eTIR aims to optimize trade operations and minimize data duplication.

As global trade routes continue to evolve, investments in both physical infrastructure and digitalization efforts are essential to ensure the resilience and efficiency of these corridors. Harmonized development tools and digitalization initiatives will be crucial in supporting the growth of emerging trade routes and safeguarding global trade against future crises.

The pursuit of efficient and resilient global trade routes requires collaboration and coordination among stakeholders, with a focus on leveraging technological advancements to overcome challenges and seize opportunities in an ever-changing global landscape.

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Global Logistics, Global Trade Daily, International Trade, Uncategorized

Insights into Trade Market Trends: An Investor’s Guide

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In the world of investing, a variety of factors persistently influence trends and impact investment choices. For investors navigating this landscape, understanding market dynamics is crucial. This article offers a thorough guide to understanding trade market trends, providing insights and strategies to assist investors in making well-informed decisions.

Understanding Trade Market Trends

Whether you’re a seasoned investor or just starting, it’s easy to be swayed by the allure of investment opportunities. A compelling sales pitch from a trader can entice you to invest significant funds into something you may not have thoroughly studied. This is why conducting due diligence is paramount.

It’s crucial to acknowledge that trade market trends are molded by a blend of macroeconomic and microeconomic forces. These encompass geopolitical events, economic indicators, technological advancements, and shifts in consumer behavior. Through meticulous analysis of these factors, investors can glean valuable insights into trade market trends and identify potentially profitable opportunities.

Geopolitical Events

Geopolitical events have a significant impact on trade markets, often leading to fluctuations in prices and volatility. Factors such as trade disputes, political instability, and military conflicts can disrupt supply chains, affect consumer sentiment, and create uncertainty in the market. 

For example, the ongoing trade tensions between the United States and China have had far-reaching implications for global trade, influencing investor confidence and market behavior. Another example is the political unrest in oil-producing regions, which can lead to disruptions in the supply of oil and affect global energy prices. 

Additionally, events such as Brexit or elections in major economies can introduce uncertainty and impact currency exchange rates, affecting the competitiveness of exports and imports. Geopolitical events are unpredictable and can have profound effects on trade markets, highlighting the importance of closely monitoring global developments and incorporating geopolitical risk analysis into investment strategies.

Economic Indicators

Economic indicators provide valuable insights into the health of an economy and its potential impact on trade markets. Key indicators such as GDP growth, inflation rates, unemployment figures, and consumer spending can help investors gauge the overall direction of the market. 

For instance, strong GDP growth and low unemployment rates are often associated with bullish market sentiment, while rising inflation and sluggish economic growth may signal a bearish outlook.

Technological Advancements

Technological advancements play a crucial role in shaping trade market trends, driving innovation, and transforming industries. From the rise of e-commerce and digital payments to advances in automation and artificial intelligence, technology is reshaping the way goods and services are produced, traded, and consumed. Investors who stay abreast of these developments can capitalize on emerging trends and position themselves for long-term growth.

Shifts in Consumer Behavior

Consumer behavior is constantly evolving, driven by changing demographics, social trends, and cultural preferences. Understanding these shifts is essential for investors seeking to capitalize on emerging opportunities in the market. For example, the growing demand for sustainable and ethically sourced products has led to a rise in ESG (Environmental, Social, and Governance) investing, with investors increasingly factoring in environmental and social considerations when making investment decisions.

Strategies for Navigating Trade Market Trends

Navigating trade market trends requires a strategic approach, informed by thorough research and analysis. Here are some strategies to help investors make the most of market opportunities:

Diversification

Diversifying your investment portfolio across different asset classes, industries, and geographical regions can help mitigate risk and maximize returns, especially in volatile market conditions. Several investment opportunities have gained considerable traction in recent years:

Real Estate

The appeal of real estate investment lies in its potential to generate passive income, build wealth through property appreciation, and diversify investment portfolios. However, like any investment, real estate comes with risks and requires careful due diligence, market analysis, and financial planning. Investors must consider risk management strategies, including insurance coverage. Rental property insurance is crucial for safeguarding against potential liabilities, damages, and unforeseen events.

Cryptocurrencies

The emergence of cryptocurrencies, such as Bitcoin and Ethereum, has created a new asset class that has attracted significant attention from investors. While cryptocurrencies are known for their volatility and speculative nature, they offer the potential for high returns and diversification benefits in a portfolio.

Venture Capital

Investing in startups and early-stage companies through venture capital funds has become increasingly popular among investors seeking high-risk, high-reward opportunities. Venture capital investments provide exposure to innovative technologies and disruptive business models, with the potential for substantial returns if successful.

Commodities

Investing in commodities such as gold, silver, oil, and agricultural products provides investors with exposure to physical assets that can serve as hedges against inflation and geopolitical risks. Commodities markets offer opportunities for both short-term speculation and long-term investment strategies.

Exchange-traded funds (ETFs)

ETFs have gained popularity as a cost-effective and efficient way to gain exposure to various asset classes, sectors, and geographic regions. ETFs track indices or baskets of assets and trade on stock exchanges, offering investors diversification benefits and liquidity.

Active Monitoring

Stay informed about market developments by actively monitoring news headlines, economic reports, and industry trends. This will enable investors to adapt their investment strategy quickly in response to changing market conditions. Additionally, investors should leverage advanced data analytics and technology tools to gain deeper insights into market dynamics and identify emerging trends. 

Risk Management

Implement risk management strategies, such as setting stop-loss orders and maintaining a balanced portfolio, to protect your investments from potential downside risks. Regularly review and adjust your risk management strategies in response to changing market conditions, economic outlooks, and personal financial goals. Remember that risk management is not about avoiding risk altogether but rather about understanding and managing risk effectively to achieve long-term investment objectives while preserving capital and minimizing potential losses.

Long-Term Perspective

Take a long-term perspective when investing in trade markets, focusing on fundamental factors such as economic growth, industry trends, and company performance rather than short-term market volatility or noise. It’s essential to maintain a disciplined approach and focus on the underlying fundamentals driving investment opportunities. While short-term fluctuations in prices may create temporary uncertainty, successful investors understand that market movements often do not reflect the true value of assets over the long term. 

Conclusion

Understanding trade market trends is essential for investors looking to navigate the complexities of the global economy and identify lucrative investment opportunities. While the investment landscape may be dynamic and unpredictable, disciplined investors who prioritize research, diversification, and patience can position themselves for long-term financial success amidst the ever-changing trade market trends.

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Global Trade Daily, International Trade

Enhancing Global Trade: Strategies for Sustainable Growth

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Global trade serves as the lifeblood of the world economy, fostering economic development, creating job opportunities, and driving innovation. However, amidst the complexities of geopolitical tensions, technological disruptions, and environmental concerns, it becomes imperative to explore strategies for enhancing global trade while ensuring sustainability and inclusivity. By leveraging innovative approaches and fostering cooperation, nations can navigate challenges and unlock the full potential of international trade.

1. Embrace Technological Advancements:

Embracing technological innovations such as blockchain, artificial intelligence, and digital platforms can streamline trade processes, reduce transaction costs, and enhance transparency. Implementing digital solutions for documentation, customs procedures, and supply chain management can expedite trade flows and minimize bureaucratic hurdles.

2. Strengthen Multilateralism:

Reinforcing multilateral trading systems, such as the World Trade Organization (WTO), is crucial for promoting fair and rules-based trade practices. Collaborative efforts among nations to address trade disputes, eliminate trade barriers, and modernize trade agreements can foster a conducive environment for global commerce.

3. Foster Inclusive Trade Policies:

Developing inclusive trade policies that prioritize the interests of all stakeholders, including small and medium-sized enterprises (SMEs), women entrepreneurs, and marginalized communities, is essential for ensuring equitable participation in global trade. Providing capacity-building assistance, access to finance, and technical support can empower underrepresented groups to harness the benefits of international trade.

4. Promote Sustainable Trade Practices:

Integrating sustainability considerations into trade policies and practices is essential for mitigating environmental degradation, combating climate change, and promoting social responsibility. Encouraging eco-friendly production methods, supporting renewable energy industries, and implementing carbon pricing mechanisms can align trade activities with sustainable development goals.

5. Invest in Infrastructure Development:

Investing in robust infrastructure, including transportation networks, ports, and digital connectivity, is critical for facilitating seamless trade flows across borders. Enhancing infrastructure capabilities in developing countries can bridge infrastructure gaps and unlock new trade opportunities, particularly in emerging markets.

6. Enhance Trade Facilitation:

Improving trade facilitation measures, such as simplifying customs procedures, reducing trade documentation requirements, and harmonizing regulatory standards, can enhance the efficiency and competitiveness of global trade. Adopting best practices in trade facilitation can minimize delays and uncertainties, thereby boosting trade volumes and economic growth.

7. Promote Trade Finance Accessibility:

Facilitating access to trade finance instruments, such as trade credit, export insurance, and trade guarantees, is vital for enabling businesses, especially SMEs, to engage in international trade. Collaborative efforts between financial institutions, governments, and international organizations can expand the availability of trade finance and mitigate risks associated with cross-border transactions.

8. Harness Regional Integration:

Leveraging regional integration initiatives, such as free trade agreements (FTAs) and customs unions, can deepen economic integration, enhance market access, and promote regional stability. By harmonizing trade rules and fostering closer economic cooperation, regional blocs can create synergies that amplify the benefits of global trade for member states.

Conclusion

Improving global trade requires concerted efforts to address the challenges of the modern era while capitalizing on emerging opportunities. By embracing technological innovations, strengthening multilateralism, fostering inclusive trade policies, promoting sustainability, investing in infrastructure, enhancing trade facilitation, facilitating trade finance accessibility, and harnessing regional integration, nations can collectively advance towards a more prosperous and sustainable global trading system. Through collaborative action and shared commitment, the potential for transformative change in global trade can be realized, driving economic prosperity and social progress for generations to come.

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Global Trade Daily, International Trade, News, United states news

China Firmly Rejects US Accusations of Trade Barriers, Calls for Compliance with WTO Rules

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China’s Ministry of Commerce (MOFCOM) issued a strong rebuttal on Tuesday against the US’ National Trade Estimate Report on Foreign Trade Barriers, vehemently rejecting its classification of China as a country of “primary concern.” The ministry urged the US to adhere fully to WTO rules instead of levying unsubstantiated accusations against other nations.

MOFCOM emphasized that the assessment of countries’ trade policies should be based on whether they violate WTO regulations, noting the absence of any evidence in the US report to support claims of Chinese non-compliance. The report’s arbitrary allegations regarding China’s purported “non-market policies and practices,” as well as barriers in agricultural products and data policies, were strongly opposed by China.

Since joining the WTO, China, as the largest developing nation globally, has consistently upheld the multilateral trading system while expanding its high-quality opening-up efforts. It has continuously refined its socialist market economy system and legal framework, emphasizing the pivotal role of the market in resource allocation. These efforts have garnered widespread recognition and appreciation from the international community, according to MOFCOM.

In contrast, the US has pursued an “America first” strategy, disregarding multilateral trade norms by unilaterally imposing tariffs, formulating discriminatory industrial policies, and imposing export controls and investment restrictions under the guise of national security. These actions have raised concerns among WTO members, including China, about fair competition, MOFCOM stressed.

China urged the US to cease its baseless criticism of other nations, abide by WTO regulations, and uphold a just and equitable international trade order, MOFCOM stated.

The annual report released by the US Trade Representative’s office on Monday alleged that China has erected trade barriers related to food safety requirements, advanced manufacturing industrial policies, and data regulations.

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Global Logistics, Global Trade Daily, International Trade, News, Ocean Ports

Emergency Shipping Route Opens Following Baltimore Bridge Collapse

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In the aftermath of the collapse of the Francis Scott Key Bridge in Baltimore, Maryland, authorities have swiftly established a temporary shipping pathway to mitigate disruptions to maritime traffic. The bridge collapsed after being struck by the Dali containership, prompting a halt in ship travel into and out of the Helen Delich Bentley Port of Baltimore.

Maryland Governor Wes Moore announced the creation of a temporary channel near the collapsed bridge during a press conference on April 1st. This alternate route, situated to the northeast of the bridge wreckage, aims to facilitate the movement of vessels around the affected area, particularly for essential commercial purposes.

The construction of the temporary channel was overseen by the Captain of the Port (COPT) and is designated for use by commercially essential vessels. The first vessel to utilize this alternate pathway was the tugboat Crystal Coast, towing a fuel barge, on April 2nd, marking a significant milestone in the recovery efforts.

President Joe Biden pledged the full support of the US government in reopening the port and reconstructing the bridge promptly after the incident. US Coast Guard Captain David O’Connell emphasized the importance of the alternate route in ensuring the resumption of marine traffic into Baltimore.

Plans are underway to establish additional channels, including a second southwest route and a third channel to accommodate deeper vessels navigating the area. Meanwhile, international support for the investigation into the bridge collapse has been initiated, with the Maritime and Port Authority of Singapore collaborating with Synergy Marine Pte Ltd to assist the US Coast Guard’s inquiry.

Tragically, the recovery operation also uncovered two bodies from the waters beneath the Francis Scott Key Bridge, underscoring the severity of the incident and the urgent need for comprehensive measures to address the aftermath.

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Global Trade Daily, International Trade, News

South Asia’s Growth Resilience Faces Structural Challenges

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South Asia is poised for robust growth in 2024, with a projected GDP growth of 6.0%, primarily driven by India’s strong performance and recoveries in Pakistan and Sri Lanka. However, despite this positive outlook, persistent structural challenges threaten to impede sustained growth and hinder the region’s ability to create jobs and respond to climate shocks, as highlighted in the World Bank’s latest South Asia Development Update.

While South Asia is expected to maintain its status as the fastest-growing region globally for the next two years, the report warns that the current growth trajectory is deceptive. Most countries are still below pre-pandemic growth levels, relying heavily on public spending to fuel economic expansion. Private investment growth has notably slowed across all South Asian nations, exacerbating the challenge of job creation amidst a rapidly expanding working-age population.

Read also: Navigating Economic Dynamics: East Asia and Pacific Region’s Growth Prospects

Martin Raiser, World Bank Vice President for South Asia, cautions that fiscal vulnerabilities and escalating climate shocks loom as potential threats to the region’s growth trajectory. To fortify resilience, he emphasizes the necessity of implementing policies to stimulate private investment and foster employment growth.

South Asia’s demographic dividend presents both opportunities and challenges. Despite a surge in the working-age population, employment growth has lagged behind, resulting in a declining employment ratio compared to other emerging market regions. Franziska Ohnsorge, World Bank Chief Economist for South Asia, emphasizes that fully harnessing this demographic dividend is imperative for the region’s economic advancement, with the potential for output to increase significantly if employment levels mirror those of comparable economies.

The report underscores the urgency of addressing weak employment trends, particularly in non-agricultural sectors, through policy interventions aimed at enhancing firm growth and facilitating job creation. Recommendations include measures to enhance trade openness, improve access to finance, strengthen business climates, and promote women’s economic participation, which collectively can boost growth, productivity, and resilience.

In addition to providing a comprehensive overview of South Asia’s economic landscape, the report offers country-specific outlooks. Bangladesh faces challenges posed by high inflation and trade restrictions, while Bhutan anticipates growth supported by electricity production and tourism. India’s economy is expected to maintain robust growth, while Maldives adjusts to shifting tourism dynamics. Nepal foresees growth driven by hydropower exports, and Pakistan anticipates economic recovery as business confidence improves. Sri Lanka expects modest growth supported by improvements in reserves, remittances, and tourism.

In conclusion, while South Asia’s growth prospects are promising, addressing structural challenges is essential to ensuring inclusive and sustainable development in the region.

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Global Logistics, Global Trade Daily, News

Charting a Course for Sustainable Global Trade: UNCTAD’s Inaugural Global Supply Chain Forum

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Amidst a backdrop of unprecedented global challenges, the inaugural Global Supply Chain Forum (GSCF) 2024 promises to be a pivotal gathering, convening leaders and experts to navigate the evolving landscape of international trade and logistics. Organized by the United Nations Conference on Trade and Development (UNCTAD) in collaboration with the Government of Barbados, this landmark event, scheduled for May 21-24, 2024, aims to shape the future of global trade in a rapidly changing world.

In recent years, the global trade arena has grappled with significant disruptions, ranging from the Covid-19 pandemic to the impacts of climate change and geopolitical tensions. These challenges have not only stress-tested global supply chains but have also underscored the critical need for resilience and sustainability, particularly for developing countries.

At the heart of the forum lies an innovation challenge, designed to inspire solutions that foster greener, more efficient, and resilient global production and distribution networks.

Focus on Resilience and Sustainability

GSCF 2024 will shine a spotlight on the indispensable role of global supply chains in driving economic growth, fostering job creation, and advancing poverty reduction, in alignment with the 2030 Agenda for Sustainable Development.

This forum is part of a broader series of events commemorating 60 years since the establishment of UNCTAD, a stalwart advocate for the Global South. Recognizing the disproportionate impact of supply chain disruptions on vulnerable economies, particularly Small Island Developing States (SIDS) and Landlocked Developing Countries (LLDCs), the forum will delve into strategies for bolstering resilience and sustainability across global supply chains. These strategies encompass everything from trade facilitation reforms to the integration of digital innovations.

Research conducted by UNCTAD reveals that the Covid-induced supply chain crisis led to a 1.5 percent increase in global consumer price levels, primarily driven by elevated maritime transport costs. The impact was even more pronounced in SIDS, where consumer price inflation surged by an additional 7.5 percent.

Strengthening the Backbone of Global Trade: Seaports

Seaports serve as vital gateways for trade, facilitating over 80 percent of global merchandise exchange. The forum will explore avenues for enhancing the resilience of seaports, particularly in vulnerable coastal nations. Additionally, digital solutions, including blockchain technology, will be championed to mitigate emerging risks and safeguard the sustainability of global supply chains amidst the rising tide of e-commerce and cyber threats.

Global Collaboration and Bridging Gaps

GSCF 2024 aims to foster collaboration among stakeholders worldwide, bringing together policymakers, industry leaders, and international organizations such as the International Labour Organization (ILO), the International Maritime Organization (IMO), and the UN Industrial Development Organization (UNIDO). With more than 500 participants from approximately 100 countries expected to attend, and over 100 entities already onboard as partner organizations, the forum promises a rich tapestry of perspectives and insights.

Government ministers of transport will converge to deliberate on a joint declaration, which will feed into forthcoming discussions at the UN’s 4th International Conference on Small Island Developing States, scheduled for late May in Antigua and Barbuda.

In Conclusion

The Global Supply Chain Forum 2024 represents a pivotal moment for charting a course towards sustainable and resilient global trade. By fostering collaboration, innovation, and practical solutions, this forum endeavors to pave the way for a future where trade serves as a catalyst for inclusive growth and shared prosperity.

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Global Trade Daily, International Trade

Red Sea Global Trade Disruptions: How to Overcome the Chaos

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Global trade has faced many recent disruptions lately due to chaos in the Red Sea, which started as a result of the attacks in Gaza. According to the Council on Foreign Relations, about 6% of global trade and 40% of U.S. container ships traverse the Panama Canal yearly. Per the U.S. Naval Institute, 12% of global trade travels the Suez Canal.

The Houthis, a religious movement, began carrying out attacks on cargo ships traveling through the Red Sea and the Suez Canal in November 2023. Vessels are avoiding these attacks in the vital waterway by sailing around Africa, adding time and cost to the trip. 

Perishable items are shipped in containers, but some items are switched to bulk carriers, which may make these items harder to handle at ports. Plus, container prices have risen by 25% or more. Perishable items have a limited life, so the lengthier shipping times can ruin them and make them unsellable. 

Ocean shipping rates are going up, and several carriers have added surcharges. Shipments are delayed, meaning orders may be canceled as customers become unhappy with shipping times. 

The Panama Canal, which could have been an alternative to the Suez Canal, is also experiencing cargo diversions because of the lack of rain, making the canal too shallow for large ocean liners. Authorities expect the canal will limit capacity to 18 slots per day, down from the pre-drought capacity of 30 ships. 

Significant challenges for international trade include: 

  • Restricted bookings on westbound routes have triggered a surge in freight rates, affecting regions in the Middle East, the Red Sea, North Africa, Europe, the East, the Black Sea, and the West.
  • Freight rates have seen a significant spike, with Asia-Europe rates surging 173%, exceeding $4,000/FEU compared to pre-diversion levels. Asia-Mediterranean prices have doubled, exceeding $5,000/FEU.
  • Carriers have introduced surcharges ranging from $500 to $2,700 per container, further driving prices higher. The FMC granted permissions for carriers to circumvent the 30-day notice for increasing rates, allowing them to bill surcharges immediately. 
  • Disruptions in one region can influence distant markets. Several EU-based auto plants have announced temporary production shutdowns due to delays in obtaining parts from Asia. 
  • Due to Panama Canal congestion, a route initially diverted to the Suez Canal will go towards the Cape of Good Hope, adding ten to fourteen days to the journey and extra costs. Shippers now face a dilemma between bypassing the Cape of Good Hope or returning to the Panama Canal with potential queuing delays.
  • Sea-Intelligence estimates a 5.1%-6% reduction in global shipping capacity, equivalent to 1.45-1.7 million TEU.
  • Companies may need to increase ship numbers on each route to maintain schedules.
  • The crisis prompts strategic reshuffling, reminiscent of past trends redirecting ships from European to U.S. routes during surges in freight prices.
  • The crisis could extend into the second half of 2024. The longer the war in Gaza lasts, the more extended shipping disruptions caused by missile attacks in the Red Sea will continue. 
  • Retailers that rely on sea freight could be more affected by the Red Sea disruption than those that source closer to home. Retailers may see longer lead times for specific products as the Red Sea situation continues. 

How to make global shipments happen

Shippers need to find alternative routes to make sure shipments happen. Routes bypassing the Red Sea might be longer but would avoid the crisis zone. Shippers must implement enhanced security measures for vessels, such as hiring private security firms or coordinating with naval forces for escorts. 

Shippers must be flexible as they navigate higher costs, longer transit times, and economic volatility. When risks like this occur, the ability to mitigate risks and deliver to customers is critical. Diversifying the supply chain to reduce reliance on routes passing through the Red Sea can mitigate the impact of disruptions in the region. Shippers must review insurance policies and risk management strategies to ensure coverage for potential regional disruptions. 

Supply chain networks may need to be redesigned with alternate logistics partners, sources, and suppliers. A supply chain network optimization solution answers “what if” scenarios to improve customer service, operational efficiency, inventory management, risk mitigation, and supply chain resilience. Supply chain network optimization solutions use data from across the supply chain to create a mathematical model representing the entire supply chain network. The model considers various constraints, objectives, and decision variables, including facility locations, transportation routes, inventory levels, and production capacities.

The Red Sea crisis is a wake-up call for companies to localize their supply chains. Shippers should have alternative sources of raw materials so they don’t have to rely on a single source for raw materials, which can make the supply chain vulnerable to disruptions. Having multiple sources allows shippers to negotiate better prices and hedge against sudden price increases from a single supplier. Because of the instability of the times, the availability of raw materials can be affected. 

Utilizing technology, such as tracking devices, predictive analytics, and communication systems, can help shippers better navigate high-risk areas and respond effectively to incidents. 

Seizing Opportunities Amid Uncertainties

  • The looming strike threat in the Eastern United States could expedite the return of cargo volume to the US-West Terminal.
  • Large importers may consider advanced shipment plans or opt for the West Coast route to mitigate potential strike risks.

Circumventing the crisis in the Red Sea requires careful planning, agility in your supply chain, and partnerships with logistics providers that can ensure shipments are shipped on time to the correct location. 

source: https://www.nexterus.com/

 

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Global Logistics, Global Trade Daily, International Trade

UNCTAD: Global Trade Expected to Rebound in 2024 Amid Geopolitical Uncertainties

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The United Nations Conference on Trade and Development (UNCTAD) forecasts a rebound in global trade, expecting it to hover around 3% this year after experiencing a 3% contraction in the previous year. Despite persistent geopolitical uncertainties, this optimistic outlook is attributed to rising demand for container shipping in recent months.

While logistical challenges such as disruptions in key shipping routes like the Red Sea, Black Sea, and Panama Canal remain a concern, the increasing demand for container shipping offers a glimmer of hope. Some East Asian and Latin American economies stand to benefit by integrating into supply chains affected by geopolitical tensions.

The report highlights the shifting landscape of trade policies, driven by domestic priorities and climate commitments. The adoption of trade restrictive measures and inward-looking industrial policies may impact international trade growth.

Looking ahead to 2024, projections are more positive, with moderating global inflation and improving economic growth forecasts indicating a reversal of downward trends. Additionally, the growing demand for environmental goods is expected to stimulate trade. However, uncertainties persist, underscoring the need for caution.

In 2023, most major economies, except Russia, experienced a decline in merchandise trade. Goods trade saw a 5% dip compared to 2022, with Russia particularly affected by a sharp decline in export levels tied to energy markets. However, there are signs of recovery, with China and India witnessing quarter-on-quarter growth in merchandise trade.

India, for instance, saw a 5% year-on-year growth in merchandise exports in the last quarter of 2023. However, on an annual basis, the country experienced a 6% contraction in export growth. These dynamics underscore the complex interplay of factors influencing global trade in the face of evolving geopolitical and economic landscapes.