Drewry says that while “it is tempting to suggest that European exporters are benefiting from trade substitution resulting from the additional tariffs being imposed in the China-U.S. market,” the different sorts of products made in Europe mean that “it is not a perfect alternative to China for U.S. consumers.”
The London-based consultants noted that westbound transatlantic volumes were up 4.5% in 2018 and 5.9% in the first five months of 2019 and “will continue to show robust health for the rest of the year, although that could change if and when the U.S. follows through on tariff threats.”
American buyers are taking advantage of cheaper prices in Europe resulting from the strength of the dollar against the euro, but in its Container Insight Weekly Drewry said that “North Europe is not an obvious alternative to China for commodities such as clothing, footwear, toys, electrical goods, furniture and other household items.
“President Trump’s trade policies are casting a pall over Europe’s economies,” Drewry said. “His aggressive crusade to protect American interests has been particularly hard on Germany, Europe’s largest economy, which has been bracing itself for a decision about whether Washington will impose tariffs on motor vehicle imports.”
Car parts move in large quantity from Europe to the U.S., and Drewry pointed to strong demand for luxury sport utility vehicles such as BMW’s X7 model, assembled in Spartanburg, S.C., where it said output is expected to increase from 356,750 units in 2018 to 400,000 in 2019, “generating additional volumes of parts from Europe.”
It also said that American importers and retailers have been increasing their stock levels of a wide range of goods — luggage, mattresses, cleaning products, sporting goods, camping equipment, shoes, clothing and consumer electronics — as there is some expectation that Americans may well be persuaded to buy ahead before inevitable price rises take effect.
Drewry said cargo moving from the U.K. to the U.S. has been up by more than 10% this year. “Commodities in most demand have been whiskey, gin, beer, salmon, chocolate, cheese and confectionary. The strength of this particular market is likely to have been fueled by U.S. importers wishing to avoid any disruption from Brexit, which was due to take place at the end of March.”
German chemical shipments also have increased because of a backload of orders that developed when low water levels restricted Rhine River barge traffic. Drewry said, “Levels at most locations are now back to normal for the time of year.”
Looking forward it said that “demand growth will struggle to stay much above 1% for the rest of the year. The dollar is unlikely to lose much value, but the more central problem is that European consumers are not currently in the mood to increase their spending given the gloomier economic outlook and unresolved Brexit issue.”
Potential upside for shipping from trade war explored
Drewry says while the U.S.-China trade war is bad news for the transpacific container trade, it could result in more transport of intermediate goods.
25 days ago