FORWARDERS serving China are gloomy about prospects for 2016 after a series of economic forecasts painted a bleak picture, reports Lloyd's Loading List.
The International Monetary Fund recently predicted a further slowing of China's economy in the next two years, with growth of 6.3 per cent predicted for this year and six per cent in 2017.
This followed confirmation that China's economy grew by 6.9 per cent in 2015, a 25-year low, news that helped spur a stock market slump amid fears that the country could suffer a major downturn.
As reported, forwarders in Hong Kong and China were already concerned about demand on key trade lanes as PMI readings weakened. According to GAC regional manager Peter Orange, those concerns have now hardened.
He said the general feeling among traders and forwarders in China was "not optimistic" with ocean freight rates bearish and lines seemingly more concerned about market share than pricing.
"This is the result of falling consumer demand in China, falling demand for resources and energy as well as generally poor market sentiment caused by the China stock market downfall.
"There is continued downward pressure on freight rates with carriers trying to restore prices, but these efforts remain unsuccessful," he said.
Mr Orange said GAC had not seen a peak season for air cargo towards the end of 2015 when the market was "very weak" while local and international demand for forwarding services had been bearish.
"In general, we see no signs of a pickup in freight demand this year," he said. "The expected pickup in demand before the Chinese New Year will probably not happen, and normally after the CNY, it is low season.
"We foresee the situation will be worse after the CNY and this will mainly be driven by the local market in China, which has been experiencing one of its most panicky moments as the economy is restructured.
"Current low ocean rates are already eating into our profit margin. There are two factors which will further aggravate the situation, driving it to the extreme negative end: first nobody knows what the lowest rates will be; and second, stiff price competition is becoming a disease that is killing both carriers and forwarders.
GAC is now attempting to focus more keenly on intra-Asia business, which is expected to continue to grow for most of the next decade, although early signs at the start of 2016 have not been positive.
PORTS
25 January 2016 - 21:17
Forwarders gloomy on China's prospects, some pin hopes on intra-Asia
FORWARDERS serving China are gloomy about prospects for 2016 after a series of economic forecasts painted a bleak picture, reports Lloyd's Loading List.
PORTS
25 January 2016 - 21:17
Forwarders gloomy on China's prospects, some pin hopes on intra-Asia
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