Business, Freight News, Sea

Trade wars – the worst could be yet to come, says Drewry

[ July 4, 2018   //   ]

Shipping consultants Drewry said in a report published on 4 July that the risk to container shipping from US-led trade wars, while currently low, was “potentially very damaging”.

In its Container Forecaster, Drewry said: “In the March report we said that we were hopeful of a peaceful resolution, but at this point in time we must accept that tariffs are going to become a reality. The only question now is: how severe will they be?”

Additional tariffs of 25% on the first list of 818 Chinese products, worth approximately $34 billion, were scheduled to be collected by US Customs from 6 July. A second list of 284 other  products covering $16 billion is currently being reviewed, while there are threats of further tariffs on as much as $400 billion of goods to follow, in response to Chinese retaliation.

In the worst-case scenario, Drewry calculates that as much as 1.8 million teu, or nearly 1% of world loaded traffic could be lost to the market in time. As things stand, the impact from the initial two lists of Chinese products would be around 200,000teu.

It said: “The current risk threat to container demand is relatively low, even when factoring in tit-for-tat measures and disputes with other trading partners, but there is clearly the potential for matters to get much darker if additional tariffs are forthcoming.”

“Perhaps, the biggest risk is the unpredictability of it all and the potential confidence knock it will give to the world economy, just when it seems to be finding its feet.”