China will remain the driving force in global container trades for years to come, with scant possibility of another region emerging to challenge its dominant position, according to a senior industry-watcher.
“There is no doubt that China is slowing down, but Asia is responsible for 50% of all containerised ocean exports and [with] China’s exports larger than the rest of Asia Pacific combined, it remains central to any rebound in global container trades,” said Michel Looten, director of maritime at global financial services and consultancy group Seabury.
China is undergoing a continuing slowdown in teu exports, imports and overall GDP growth. In the period from 2007-14, China’s compound average growth rates (CAGR) for teu exports and imports were 3% and 7% respectively, compared with 18% and 16% from 2000-07. Real GDP growth fell from 11% to 9% during the period.
According to the Paris-based Organisation for Economic Cooperation and Development (OECD), GDP growth is expected to decline to 6.7% in 2016.
Despite the slowdown, China will remain the most important global market in global container trades for years to come, said Looten, who noted that while the much-touted southeast Asia region was enjoying high average growth rates and relatively high volumes, it lacked the scale and scope to become a China ‘replacement’ and have a significant impact on global trade growth in the near to medium term.
Among the five major exporting regions, southeast Asian exports grew fastest in the period from 2010-14. Southeast Asia took a 14% share of global exports in 2014, exporting about 18 million teu, compared with China’s 32%, according to Seabury data.
“Although the rest of Asia will grow faster than China, no market will come close to having the impact China has in the near future,” Looten told delegates at the annual TPM Asia conference in Shenzhen organised by IHS Maritime & Trade.
Southeast Asia is China’s largest source of containerised imports, while North America – comprising the US and Canada – remains the largest export destination for containerised goods from China.
Within China, the sources of containerised export and imports are still the traditional locations, with Guangdong province leading the charge with 6.3 million teu in exports and 2 million teu in imports expected to be generated in 2015, followed by Zhejiang and Jiangsu provinces adjacent to Shanghai. Inland provinces combined currently account for just 3.3 million teu in exports and 0.9 million in imports.
“Although China’s fastest growing provinces are located inland, the great majority of growth in absolute numbers still comes from the coastal provinces. If you are doing business in China, these are the provinces where you should focus your strategy as it is still where most new business is generated,” said Looten.
In terms of commodities, raw materials are taking a more dominant position in China’s containerised exports. According to Seabury, the share of raw materials – already China’s largest export industry – has increased by 1.4% over the past four years, while the share of consumer goods declined by 1.5% in the same period.
Concentration of raw materials exporters is strongest in the northeastern provinces and around Shanghai, while most consumer goods originate from around Shanghai and the south.
“This may be an important reason why trades in the north are growing faster,” said Looten.
On the import side, while perishables and consumer goods have substantially outgrown other import industries in recent years, these categories still account for just a fraction of overall imports, which are still dominated by raw materials.
The perishables industry is quite concentrated in the northern part of China, while raw materials importers are spread throughout the country.