‘Slight contraction’ in worldwide trade expected in Q3

The Global Trade Barometer released Thursday “clearly illustrates why trade disputes create no winners,” said DHL Global Forwarding, Freight CEO Tim Scharwath.

‘Slight contraction’ in worldwide trade expected in Q3

The Global Trade Barometer released Thursday “clearly illustrates why trade disputes create no winners,” said DHL Global Forwarding, Freight CEO Tim Scharwath.

‘Slight contraction’ in worldwide trade expected in Q3

The Global Trade Barometer released Thursday “clearly illustrates why trade disputes create no winners,” said DHL Global Forwarding, Freight CEO Tim Scharwath.

 

   Worldwide trade is expected to undergo a “slight contraction” during the third quarter of 2019 as a result of the trade dispute between the U.S. and China, according to the June Global Trade Barometer (GTB) released Thursday by Germany-based package delivery and supply chain management company Deutsche Post DHL Group.
    The GTB reported an overall drop in the world trade outlook by eight points to a new index value of 48 for the countries it tracks — United Kingdom, India, Germany, Japan, China, South Korea and the United States. An index value above 50 represents growth and below shows decline. Air trade and ocean trade are both projected to fall one point to 49 and 48, respectively.
    The GTB reached nearly 70 points in mid-2018, but has since seen a downward trend. The current contraction is the first since 2015, when it measures more than a monthlong decline in trade volumes in the middle of the year.
    “The latest GTB clearly illustrates why trade disputes create no winners,” said Tim Scharwath, CEO of DHL Global Forwarding, Freight, said in a statement. “Nevertheless, some major economies such as Germany continue to record positive trade growth. And from a year-to-date perspective, world trade growth has still been positive. Hence, we remain confident in our initial prognosis that 2019 will be a year with overall positive but slower trade growth.”

   The U.S. saw the biggest loss among the GTB countries with an 11-point decline to 44, driven by a negative outlook for major export categories. China suffered the second-biggest drop — a seven-point decrease to 49 — due to declining imports in several categories combined with minor overall export growth, DHL said.
    America and China had the two largest downturns of ocean trade outlooks of 14 points and eight points, respectively. The U.S. also had the second-largest drop in air trade outlook of eight points, behind only Japan’s 11-point decline, while China fell six points.
    The diminishing trade growth rates of the U.S. and China contribute to a large extent of the projected global decline because of their large contribution to the global index, DHL explained.   
    “The still rather mild global trade contraction can be explained by the fact that during trade conflicts, trade flows do not merely dry out,” DHL said. “Instead, trade routes and supply chains shift into other countries. On a global scale, this partly offsets the negative effects of trade tensions between countries.”
   The United Kingdom was the only country to increase its index score, improving two points for a value of 56. The result could be an “indication that companies are increasingly stockpiling inventories in face of the risk of a hard Brexit at the end of October,” DHL said.
    Its air trade outlook improved six points, but its ocean trade outlook declined four points.
    Germany’s overall index level fell by one point to 52 with air trade falling six points but ocean trade “expected to grow moderately” with a three-point jump, according to the GTB. India’s outlook fell six points to 53 point, with its air trade outlook decreasing six points and its ocean trade outlook falling by four points, the GTB found.
    “The German growth revival looks fragile while India’s growth has hit the skids, with rising doubts about the prospects of major economic reforms,” said Eswar S. Prasad, professor of trade policy and economics at Cornell University, in the release. “A synchronized slowdown of the world’s major economies could affect trade volumes, if the uncertainty continues to dampen consumer demand and business investment.”
    Japan’s index fell seven points to 50, indicating stagnating trade dynamics. South Korea’s outlook dropped three points to 46.
   The next GTB, which was designed in cooperation with Accenture, is scheduled to be released at the end of September.

It’s important to understand that CBP’s role is not the policy maker. We’re the tip of the spear in terms of enforcement for exports.

Drewry’s World Container Index, a composite of container freight rates on eight major routes to and from the U.S., Europe and Asia, was down 1.4% to $1,351.15 per 40-foot container as of June 13.

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‘Slight contraction’ in worldwide trade expected in Q3

The Global Trade Barometer released Thursday “clearly illustrates why trade disputes create no winners,” said DHL Global Forwarding, Freight CEO Tim Scharwath.

Jun 28, 2019 on Dec 27, 2018AmericanShipper.com

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‘Slight contraction’ in worldwide trade expected in Q3

The Global Trade Barometer released Thursday “clearly illustrates why trade disputes create no winners,” said DHL Global Forwarding, Freight CEO Tim Scharwath.

Jun 28, 2019 on Dec 27, 2018AmericanShipper.com