It has been a tough two or three years for companies in the import/export business or transportation sector. World trade saw a major dip in 2009 – The united nations Conference on Trade and Development (UNCTAD) described it as an unprecedented trade contraction, revealing that merchandise exports dropped about seven times more rapidly than global gross domestic product.
- International seaborne trade contracted by 4.5% in 2009 and fell below 2007 levels from the all-time high attained in 20081.
- estimates put total seaborne trade during 2009 at 7.84 billion tons, according to the UNCTAD Review.1
The World Trade Organization (WTO) said that the global economic crisis in 2009 caused a 12.2% contraction in the volume of global trade — the largest decline since World War II.2
- The value of world merchandise exports fell 23% to USD 12.15 trillion in 2009, while world commercial services exports declined 13% to USD 3.31 trillion.
Recovery in 2010
But there was a good recovery in 2010. According to WTO figures, the volume of exports in 2010 rose by a record breaking 14.5% (the fastest growth since records began in 1950), enabling world trade to recover to its pre-crisis level but not its long-term trend. Developed economies recorded export growth of nearly 13% in 2010, compared to a 16.5% average increase in the rest of the world.3
Announcing the figures in April 2011, the Director-General of the WTO, Pascal Lamy, said: “The figures show how trade has helped the world escape recession in 2010. However, the hangover from the financial crisis is still with us.” WTO economists forecast that world trade growth should settle to a more modest 6.5% expansion in 2011.
Cautious optimism for the future
While there is no tangible ‘feel good factor’ in the import/ export trades, since 1 January 2011 we have seen cautious optimism in Europe in terms of turnovers – customers are talking about modest increases, but they are still very small and certainly not yet back to the levels pre-crisis. This is inline with forecasts from UNCTAD that the shipping industry and seaborne trade are recovering, but it will take beyond 2011 to return to 2009 levels.
Asia: the engine room for world trade growth
Despite the economic downturn, Asia is still driving global trade. Asia exhibited the fastest real export growth of any region in 2010 with an increase of 23.1%. This was led by China and Japan, whose shipments to the rest of the world each rose roughly 28%. In 2010, China overtook Germany as the world’s leading merchandise exporter, accounting for almost 10% of world exports, and is now second to the US on the import side, accounting for 8% of world merchandise imports according to WTO fi gures.2 The growth is particularly in infrastructure projects – Indonesia, Thailand, and China are all ploughing billions of dollars into their infrastructures – building power stations, bridges, and roads. And naturally, it has an impact on cargo transportation.
Commodities and hi-tech products
As well as infrastructure projects, there is also a focus on commodities. There are huge amounts of hard commodities – iron ore, steel, coal – moving into the Asian region from Australia, India, and South America. And then there are a lot of finished products being produced by China, Taiwan, Korea and Japan and exported outwards, such as hi-tech products like smart phones, portable media players and 3D TVs. The entire Asian region is continuing to see high levels of trade, both import and export: the raw materials being imported and the finished products being exported.
Effects of the downturn
The economic downturn has had a major effect on companies in the import/export business or transportation sector, not least the decline in demand for goods which saw trade levels fall globally. But the downturn has also resulted in cost-cutting across the sector. This has impacted crewing levels and quality of crews, and resulted in reduced investment, if any at all, in training, vessel maintenance, logistics quality and risk engineering. As the recovery proceeds, all of these areas will require additional investment to ensure that losses and delays are kept to a minimum.
Despite the temporary impact of the economic downturn, globalization continues apace. More and more companies find themselves looking to overseas markets, either to sell their products or to import goods or commodities. This creates new challenges for companies in terms of unfamiliar territories, changes in where the suppliers and markets are, and of course logistics.
One of the biggest challenges is ensuring the efficiency and strength of the supply chain. Breaks in the supply chain can be costly and impact on profits. There is a much greater risk of this where global trade results in an extended supply chain. As a result, active supply chain management is increasingly necessary to ensure that weak spots are identified, alternatives prepared, and business interruptions minimized.