17 April 2024 (Lloyd's List) - CONTAINER shipping’s GPD multiplier, the ratio between global economic growth and container volume growth, has fallen substantially since the end of 2019, as the sector struggled to maintain momentum in the fallout of the pandemic.
“Due to the Covid-19 pandemic, the global container market grew only 1.5% from 171m teu in 2019 to 173.5m teu in 2023,” said BIMCO chief shipping analyst Niels Rasmussen.
“Without the pandemic, that figure would have been 24.6m teu higher, landing at 198.1m teu in 2023.”
Rasmussen’s counterfactual argument is based on International Monetary Fund forecasts from 2019 that expected global economic growth of 3.5% in the years from 2020-2023, in line with the 3.4% seen in the years leading up to the pandemic.
But the impact of lockdowns, pandemic-driven fiscal policies and ensuing inflation and increases in interest rates led to an actual annualised average growth rate of just 2.6%.
Meanwhile, despite the initial resurgence in volumes through to the end of 2021, the container market grew at just 0.4% during the full 2020-2023 period. This meant the GDP multiplier fell to just 0.14.
“Between 2013 and 2019, the GDP multiplier averaged 1.06,” Rasmussen said.
“Had this been maintained during 2020-2023, the market would have grown at an average annual rate of 2.7% and the 2023 container market would have ended 16.8m teu higher.”
While the multiplier between regional GDP growth and regional container import volumes was lower than during the 2013-2019 period in all regions, in East Asia and Southeast Asia, and Europe and Mediterranean regions, the multiplier was negative during 2020-2023.
Import container volumes ended lower in 2023 than in 2019 in these regions, with 11.4m teu of the 16.8m teu lost due to a lower GDP multiplier in the two regions.
And although average annual GDP growth in North America ended the 2020-2023 period 3.6% higher than the IMF predicted in October 2019, in other regions, GDP growth was lower than the 2019 projection and global average annual GDP growth ended 28% lower than the projection.
“Had the global economy grown as originally predicted during 2020-2023, and had the GDP multiplier matched the 2013-2019 level, the global container market in 2023 would have been 24.6m teu higher,” Rasmussen said.
“Whether or not pent-up demand, and/or global economic growth above trend, can help recover part of the lost growth in coming years remains to be seen. However, current predictions for growth in the global economy do not indicate a resurgence in growth.”
The IMF’s latest forecasts expect to see global GDP growth of 3.1% in 2024 and 3.2% in 2025. Based on the 0.14 multiplier, this would indicate container volume growth of less than 0.5% in each of the coming years.
