24 April (Lloyd's List) - GEOPOLITICAL issues are changing container shipping trade flows, according to Ocean Network Express chief executive Jeremy Nixon.
A case in point is the transatlantic trade, where freight rates and volumes have managed to stay relatively firm despite the overall market corrections since last year, he told Lloyd’s List on the sideline of a Capital Link Forum in Singapore.
“That is synonymous with the fact that the US is now importing more from Europe than it used to do.”
That is to do with some products and items — such as industrial components, chemicals, foodstuffs as well as lifestyle products — which would have come from Asia is now being sourced more from Europe, particularly out of the Mediterranean and northern Europe, said Mr Nixon.
“So that we hope will continue with the trend.”
He told the forum that the situation in the US and China has kept ratcheting up economically, with a deleveraging in trade between the world’s two largest economies in the past 12 months.
The proportion of US container imports from China has dropped to about 35% from 45% over the period, he said.
“Many companies in the US are looking to reduce the amount of imports that are coming from China. Of course, that’s beneficial to Southeast Asian, to Vietnam, Indonesia, Malaysia and India already coming up very strongly. And Japan and South Korea have done well as well.”
Similar trends have also been witnessed by other industry experts, including Xeneta whose analysts in a recent webinar pointed out signs that geopolitical tensions and the desire for secure supply chains are change how the world trades, while the effects of friendshoring are starting to show in trade volumes.
Mr Nixon said that nearshoring is also going on particularly in the areas in areas including sustainability, alternative energy and semiconductors, the Biden administration is stepping efforts to lure capacity to back to the US. “That area is going to see huge changes in the next five to 10 years.”
That said, the shifting volumes is expected to “balance out” in due course.
“As we all know, there’s a certain amount of production in the world and you can’t just turn it on, turn it off and move it so easily. And all the ships of all the ports won't be able to cope,” he said.
While the US will continue to trim its shipments from China, the latter’s exports could move to other countries because factories in the alternative manufacturing hubs, such as Vietnam and India, only have a finite capacity, he explained to Lloyd’s List.
For shipping lines, it is important to stay “lean and agile”, he said. “We have to be there to serve the customer, and within the confines of the sanctions and economic regulations find the best way to move the cargo keeping supply chains moving.”
He dismissed concern regarding another shake-up of shipping alliances after the world’s two largest carriers Mediterranean Shipping Co and Maersk decided to disband their 2M grouping.
“We will carry on as the Alliance, and I presume Ocean Alliance will carry on as the Ocean Alliance. And we’ll wait to see what happens to it in terms of is it a systemic structural break? Or is it a partial separation,” he said, adding he’ll be surprised to see a reshuffle of the other two alliances after the 2M agreement expires.
