Ship-Technology recently has analyzed the US-China
trade war from the point of view of the shipping industry and it sees that the
trade war if grown fully would not do well for the shipping; some say, however,
that it would benefit the industry. At present, it seems everything is uncertain;
if anything is certain, it is only uncertainty.
are both “good” and “easy to win”, said US President Donald Trump, shortly
after announcing a new 25% tariff on steel imports and 10% levy on aluminium
imports at the start of March.
President was sort of fulfilling his electoral pledge of protectionism.
his inaugural address he had said that, when it comes to trade, “protection
will lead to great strength and prosperity.”
It is not
difficult at all to find out the target nation; it is China. He has always
looked upon the trade with China as asymmetrical and one-sided obviously
suggesting that China derives all the benefits of the trade. The President even
said that Beijing is undercutting US companies and torpedoing jobs and
communities across the country as a result of its unfair commercial practices.
China began a trade war with both the countries imposing import tariff on the
products of the other country. Though
America began the trade war, China lost no time in taking retaliatory measures.
This trade war can be considered just as Sin0-American affair; but, as Ship
Technology points out, since Europe has been granted exemption from tariffs –
as well as Argentina, Australia, Brazil, South Korea, Canada and Mexico – there
are concerns that tensions could spell out bad news for global trade.
shipping industry experts fear that the situation if grows into a full-blown
trade war, will affect the shipping industry in terms of its volumes which in
turn would impact on the bottom lines for container shipping lines.
“There is no doubt that a trade war, between the US
and China – and any other countries for that matter, is outright bad for
shipping,” says Peter Sand, chief shipping analyst at Baltic and International Maritime
“The shipping industry is feeding on globalisation and
facilitates prosperity across the globe. Countries engaging in trade wars are
harmed by it, as it results in suboptimal use of resources.”
According to Sand, dry bulkers – used for the
transportation of steel and soybeans – are most likely to be hit hardest. The
impact on container shipping is set to be on “eastbound transpacific head haul
trade from the Far East to North America”.
“Amongst the top ten commodity categories affected, we
have the likes of electrical machinery, metal manufactures and specialised
machinery,” he says. “Imports into the US are likely to go somewhat down as the
tariffs enter into effect.
also be fewer boxes moving west from the US, although this is not key to
shipping. It means more to the ports than to carriers, as back haul freight
merely covers a part of the repositioning costs.”
The CEO of the Northwest Seaport Alliance (NWSA)
feared that the trade war between the U.S. and China could do more harm than
good for the local economy.
“Our success as
an airport and seaport gateway is inextricably linked to China,” said Wolfe.
“While there are justifiable concerns about China’s trade practices, we
continue to believe that productive engagement and negotiations are the best
path to ensuring a fair and level playing field for mutually beneficial trade.”
According to preliminary studies conducted by
independent maritime research consultancy Drewry, a worst-case scenario could
see 1% of global loaded container traffic exposed to higher costs as a result
of the new tariffs – negatively impacting on overall container growth.
“We are very concerned this will turn into a
full-blown trade war, in which case there will be no winners,” explains Simon
Heaney, senior manager for container research at Drewry’s London office.
“The container market is in recovery mode after some
tough years and any tit-for-tat trade dispute will be an unwelcome development
for shipping lines, even if a lot of the tariff list goods will actually be
airfreighted rather than move by sea.”
Some, however, have chosen to dismiss predictions of a
catastrophe at the hands of the levies.
Speaking to Bloomberg in the
aftermath of the announcements, Gerry Wang, co-founder and former CEO of Hong
Kong-based containership charter owner Seaspan, argued the net impact on the
shipping industry to be “minimal”. The tariffs, claimed Wang, would be offset
by tax cuts, which could generate more volumes, and increase demand.
“Being a very optimistic industry, some also believe
that the industry could benefit from this,” admits Sand. “As the existing trade
patterns shift, more ton-miles may be added.”
Right now, the only certainty for the shipping
industry is uncertainty. With trade between China and the US accounting for
around 4% of global commerce, it seems likely that any ongoing dispute will
have consequences for global trading patterns at some point in the future.
“It is very hard to second guess how this will end,”
says Heaney. “Very recent history suggests it might not be anything more than
sabre-rattling to appeal to President Trump’s core voters, as tariffs on steel
and aluminium announced in early March were quickly followed by a long list of
“The threat to Chinese exports could just be another
example of the US President’s aggressive trade tactics designed to force
concessions, but it’s a very dangerous game of chicken, as China is unlikely to
“The industry is genuinely
afraid of further escalation,” says Sand.