Seaborne

Check trends

Recent changes in demand trends contributed to the slowdown in maritime trade growth in 2014 (3.2%) and 2015 (2.0%). Clarkson Research Services Limited checks how this has reflected changes in demand for bulk shipments to major importing countries?

After a decline in 2009, maritime trade grew by an average of 4.9% per year between 2010 and 2013, reflecting booming import demand in a number of key importing countries and outpacing GDP growth global.

The ratio of global maritime trade growth to GDP growth (the “multiplier”), when considered over a long period, can be a useful indicator of the impact of maritime transport drivers.

After the economic downturn, the ratio averaged 1.3 in 2010-2013, partly because China’s strong GDP growth led to a sharp increase in raw material imports and global production was outsourced to regions further away from demand centers. Since 2014, the ratio has fallen below 1.

The decline was most pronounced in 2015, with the ratio reaching 0.6, when world maritime trade is estimated to have increased by 2.0% and GDP by 3.1%, partly reflecting the evolution of the import request. Bulk import growth (dry bulk and oil) to the top five importing countries in 2015 (see chart) slowed from an average of 5.5% per year in 2012-13 to 1.6% per year in 2014-15, with freight totaling 3.7 bt, equivalent to 49% of world bulk trade.

Of course, China, the world’s largest importer of bulk cargo, played a key role in supporting the multiplier. The country’s bulk imports, which account for 23% of the world’s bulk maritime trade, grew by an average of 11% per year between 2010 and 2013.

However, the shift in China’s maturing economy, diversifying away from heavy industry, has led to a marked slowdown in bulk import growth. Shipments to China increased by 3% in 2014 and remained relatively stable year-on-year in 2015.

Sea coal imports to the country fell 30% year-on-year to 188 tonnes in 2015, while iron ore import growth slowed to 3% from 15% in 2014. However, part of the loss was offset by robust growth in crude imports, partly supported by the collapse in the price of oil.

While China is often touted as one of the main drivers of slowing global trade growth, import expansion in some other major countries was also slower in 2014-2015.

Japan’s bulk imports, which account for 8% of the world total, grew by an average of 3% per year in 2012-13 and fell by 2% per year in 2014-15, reaching 588 tonnes in 2015. Elsewhere, although the expansion of Indian bulk imports has been firm, it is slowing. Growth slowed to 8% in 2015 due to a drop in coal imports.

By contrast, the rate of increase in Korean bulk imports accelerated in 2014-2015, largely supported by firmer growth in dry bulk shipments, although this was not enough to offset the slowdown in many other countries. Elsewhere, the rate of decline in US imports has slowed, with most of the drop in oil imports having already taken place.

So while China’s maturing economy has recently contributed to the slowdown in trade growth, it has not been the only driver. Maritime trade has continued to grow strongly since the start of 2009, by around 30%. But the global fleet is now 48% larger in terms of GT.

The excess capacity now evident in many sectors clearly reflects the concerted pressure of slower shipment growth among major importers.