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July 05, 2018

Trade wars threaten to derail revival of ocean container shipping

The risk to container shipping from U.S.-led trade wars is currently low, but potentially very damaging, according to the latest edition of the Container Forecaster published by global shipping consultancy Drewry.

"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?" said Simon Heaney, senior manager, container research at Drewry and editor of the Container Forecaster.

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 over a period of time. As things stand, the impact from the initial two U.S. lists of Chinese products alone would be relatively insignificant at around 200,000 teu.

Drewry research shows that revised lists announced on June 15 were heavily weighted towards industrial goods, while also being readily available from other trading partners. China only exported about 13% of the first list of products to the US last year and around 8% of products on the second list.

"With other sourcing options available, tariff increases on Chinese goods on these initial products lists will most likely create a small amount of trade diversions and raise the prospects of other exporting partners of the US," said Heaney.

Source: Drewry