Long Term Change In Trade Patterns Predicted

Aug. 10, 2009
Growing demand within China and declining demand for Chinese goods foretells changes

Growing consumer demand within China, coupled with declining demand for Chinese goods in the West could affect container traffic says MDS Transmodal.

“The impact on the import/export balance of container traffic is dramatic,” says Mike Garratt of MDS Transmodal. “In Q2 2008 there were only 56 tonnes of Chinese imports for every 100 tonnes exported. One year later, that figure has grown to 80 tonnes. If that trend continues, container lines will have to seriously address their strategies.”

Chinese exports drive the overall demand for global shipping capacity, notes Garratt. “Here the picture is bleak. A year-on-year fall of 23% for Q1 2009 has been followed by a 22% decline in Q2 2009. The best that can be said is the decline has been arrested. Q2 2009 results are 24% lower than in Q3 2008, the peak quarter of all time.”

The decline in the ability of the West to consume Chinese goods is widespread, base on an analysis of the destination of Chinese exports. Ranking destination countries by their container tonnages received in 2008, growth cannot be found for Q2 2009 until China’s 22nd ranked export destination is reached (Saudi Arabia).

Based on second-quarter Chinese trade data, coupled with the announcement that US GDP continued to fall over the same period leads MDS Transmodal to conclude, “Our analysis of the trade data provides tangible evidence of a restructuring of the economies of the Far East and the Western world.” Garratt continues, “China, and probably the rest of the Far East except Japan, is sucking in the exports it needs to support its domestic economy that continues to expand–without needing to export in the same quantities it used to.”