An insight report released by Drewry Maritime Research explains the strain felt in Chinese commodities markets as the country makes a transition from growing the economy less through investment and more from services and consumption – a situation that is causing a strong dip in container throughput.
Greater China (including Hong Kong) represents approximately 30% of all container moves in the world, having nearly doubled its share since the start of the century when its expansion was given a major boost following entry into the World Trade Organization (WTO).
Drewry believes that the direction of the Chinese economy has a huge bearing on world port throughput growth. The International Monetary Fund (IMF) was not moved to change its forecast for China in its latest World Economic Outlook, keeping GDP growth pegged at 6.8% for this year and 6.3% in 2016.
This slowing trend has prompted Drewry to downgrade its outlook for Greater China, and subsequently, world container traffic.
Limited visibility into the breakdown of Chinese port statistics makes it difficult to assess the relative strength of container imports and exports, but using the WTO’s merchandise trade data (based on value in US dollars) as a substitute, the share of imports is estimated to be in the mid-40% range.
Drewry estimates that China container imports only grew by 1.6% last year, whereas exports rose by 9.1%. The net effect was that total volume growth was unchanged at 5.6%.
The latest WTO data suggests that China’s merchandise imports were down by 15.5% in the first six months of 2015, whereas merchandise exports managed a 1.0% rise.
Drewry has cut its 2015 growth forecast for Greater China port throughput from 5.8% to 4.9%, which represents a shortfall of approximately 1.85 million TEU, or roughly 1% of world traffic in 2014.
Drewry View: The risks from a slowdown in Chinese consumption to container shipping are far smaller than for the dry bulk sector, but they are not inconsiderable and will contribute to slowing world box growth.