Drewry expects little immediate impact from Sino-US trade war
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Drewry expects little immediate impact from Sino-US trade war

THE risk to container shipping from Sino-US trade wars is low, but potentially damaging given time, according to London's Drewry Maritime Research

11 July 2018 - 19:00

THE risk to container shipping from Sino-US trade wars is low, but potentially damaging given time, according to London's Drewry Maritime Research.

'We were hopeful of a peaceful resolution, but we must accept that tariffs are going to become a reality. The only question now is: how severe will they be?' said senior analyst Simon Heaney.



Additional tariffs of 25 per cent on the first list of 818 Chinese products, worth US$34 billion, are scheduled to be collected henceforth.



A second list of 284 newly recommended products covering US$16 billion is currently being reviewed, while there are threats of further tariffs on as much as US$400 billion of goods to follow, in response to Chinese retaliation.



In the worst-case scenario for eastbound transpacific container trade, Mr Heaney said 1.8 million TEU, or one per cent of world laden boxes could be lost to the market.



This scenario envisages a trade war with tariffs of US$450 billion being applied to Chinese imports.



As things stand, the impact from the initial two 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 per cent of the first list of products sto the US last year and eight per cent 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,' Mr Heaney 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.'



However, Drewry has upgraded its demand forecast for the next two years to 6.5 per cent and 5.8 per cent respectively based on a redesigned demand forecasting technique.

Source: WORLD SHIPPING
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