Smooth Sailing: Container Shipping Poised for Record 2018
January is here, and, with so many recent changes in trade and technology, all of us in the container shipping industry are eager to predict what will happen in the year ahead. But making predictions is notoriously difficult. As we noted in our blog post about Black Swans, unexpected events occur surprisingly frequently: just witness the election of Donald Trump or the spate of megastorms that recently struck the United States. So rather than rely on crystal balls or anecdotal trendspotting, we think the best way to predict the future is by analyzing the past, drawing on facts and figures rather than emotional reactions.
So here’s the good news: 2017 was an incredible year for container shipping and for trade in general, and the trends we’ve identified bode well for 2018. One of the most fascinating and yet overlooked things about our industry is that it simultaneously operates on a global, national, and local level. So simply analyzing global trade numbers is not sufficient. The day-to-day financial results of a Freight Forwarder may rely on the economics and operations of a single port more than it relies on an international trade treaty. So here’s our take on how 2017 is signalling a great 2018 at all of these levels.
Global
We’re witnessing a rare phenomenon in the global economy right now. Nearly all of the major economies are in a synchronized upswing, giving an extra boost to the world’s economy. That of course bodes well for international trade. Analysts at Goldman Sachs and Barclays are predicting 4% global trade growth in 2018. Oxford Analytics, quoted in Bloomberg, wrote that "The global economy appears set to remain in good shape in 2018 as the broad-based economic strength seen [in 2017] will carry over.” They subsequently raised their global trade forecast by .5% and noted “We see some scope for further upward revisions.”
It’s not clear if this trade acceleration is due to individual domestic economic strengths or to President Trump’s intentions to demolish trade barriers, but the consensus opinion is that global trade -- and therefore, container shipping -- is due for a banner year in 2018.
U.S. Domestic
We hope that all of our non-U.S. readers will understand if our national statistics are based on the US. In future posts, we will certainly address trade in other critical economies such as China and India.
The data for U.S. trade speaks for itself: With the Commerce Department reporting 3.3% annual growth in U.S. economic output in 2017, the outlooks for both trade and the U.S. economy in general are strong. But what fascinated us more than the numbers was a credible theory as to why trade is turning in consistently strong numbers.
Some analysts say the rise is partly attributable to the new peak season of shopping: retailers request a second shipment wave to meet e-commerce demands after the first shipment wave meets brick-and-mortar demand. If that’s the case, then the numbers will only continue to improve since e-commerce is an unstoppable force in the economy. Plus, as more developing economies shift to e-commerce, this trend can provide a global trade lift beyond what we’re already witnessing.
Local
We’re writing this from New York City, where CoLoadX is based, so all we have to do is look out our office windows to (almost) see that New York / New Jersey container traffic was at an all-time record last year. And the NY / NJ + LA / Long Beach total was up about 2.5%.
Of course, it can be risky to extrapolate local port trends to other geographic areas, but the critical fact is that local trends matter. And this is where Freight Forwarder expertise comes in. Global facts and figures can only tell you so much. You possess unique expertise about the ports you service and, when combined with the global reach provided by a good technology platform, you can harness these global, national, and local trends to make 2018 a record year for you and your business.
By: CoLoadX on Jan. 5, 2018, 12:29 p.m.