Congestion at major container freight ports this month has disrupted shipping operations and is leading to stagnation in global trade, Kiel Trade Indicator data shows.
Overall global trade is expected to remain pegged to its August level, with an indicator value of zero. The same is expected for Germany’s trade, while overall EU exports are not expected to rise from the -0.1 per cent value recorded last month, Kiel Institute for the World Economy, which compiles the trade indicator, said on Tuesday.
For the US, the Kiel indicator shows slightly negative signs, with exports down by 0.5 per cent and imports 0.7 per cent lower.
The volume of world merchandise trade, which slumped by 5.3 per cent in 2020, has rebounded from the pandemic-induced collapse that bottomed out in the second quarter of last year. It is expected to grow by 8 per cent in 2021, according to World Trade Organisation estimates. However, bottlenecks in global shipping have increased costs and are threatening to reduce the pace of growth.
"The terminal closures in China are leaving their mark and dampening the exchange of goods,” said Vincent Stamer, head of Kiel Trade Indicator.
“There are no signs of a sustained easing of the situation, which clouds the outlook for international trade. This is likely to be felt via rising prices and continuing shortages of certain goods, including in the Christmas trade."
Congestion off Ningbo-Zhoushan and Los Angeles currently ties up about 3 per cent of global trade volumes in each of their main trade lanes.
Cargo volumes in the Red Sea – the main sea trade route between China and Europe – are 14 per cent lower than would be expected under normal circumstances.
"Christmas is not cancelled, but especially for products from China and Asia, missing deliveries or higher prices are to be expected," Mr Stamer said.
However, despite congestions issues, China seems to have found a way to overcome the closures of its terminals at the ports of Ningbo-Zhoushan and Yantian. Despite bottlenecks off the Chinese coast, more goods were shipped from these ports and Shenzhen in the past four weeks than in the four weeks before that.
For China's exports in September, the Kiel Trade Indicator signals an increase of 6.2 per cent and for imports an indicator value of 0.8 per cent.
The Kiel Trade Indicator estimates and analyses trade flows in terms of imports and exports for 75 countries worldwide, across the EU, and global trade as a whole.
It is based on the evaluation of ship movement data in real time. Through an algorithm programmed at the Kiel Institute, it uses artificial intelligence to translate the ship movements into nominal, seasonally adjusted growth figures compared with the previous months.
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Strait of Hormuz
Fujairah is a crucial hub for fuel storage and is just outside the Strait of Hormuz, a vital shipping route linking Middle East oil producers to markets in Asia, Europe, North America and beyond.
The strait is 33 km wide at its narrowest point, but the shipping lane is just three km wide in either direction. Almost a fifth of oil consumed across the world passes through the strait.
Iran has repeatedly threatened to close the strait, a move that would risk inviting geopolitical and economic turmoil.
Last month, Iran issued a new warning that it would block the strait, if it was prevented from using the waterway following a US decision to end exemptions from sanctions for major Iranian oil importers.
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May 15: Yokohama, Japan
June 5: Leeds, UK
June 24: Montreal, Canada
July 10: Hamburg, Germany
Aug 17-22: Edmonton, Canada (World Triathlon Championship Final)
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A prototype pathogen approach for pandemic preparedness
FIXTURES
UAE’s remaining fixtures in World Cup qualification R2
Oct 8: Malaysia (h)
Oct 13: Indonesia (a)
Nov 12: Thailand (h)
Nov 17: Vietnam (h)
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
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Tearful appearance
Chancellor Rachel Reeves set markets on edge as she appeared visibly distraught in parliament on Wednesday.
Legislative setbacks for the government have blown a new hole in the budgetary calculations at a time when the deficit is stubbornly large and the economy is struggling to grow.
She appeared with Keir Starmer on Thursday and the pair embraced, but he had failed to give her his backing as she cried a day earlier.
A spokesman said her upset demeanour was due to a personal matter.
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