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INTRA-ASIA,
fastest growing trade area worldwide, accounts
for 25 per cent of Asia's total of US$6
trillion in annual exports and this number
is expected to increase.
Not
surprisingly, China is the major driver
in this growth with 37 per cent of the total
ASEAN trade taking place with China.
It
is largely an LCL (less than container load)
world and not only are individual consignment
smaller so is the value per cubic metre.
Even boastful growth numbers are largely
produced by exports from shallow-water Asian
ports in feeder ships to deepwater Asian
ports like Colombo, for onward passage by
major carriers' mega ships to Europe or
the Americas.
And
volume out of Asia is still largely an export
trade. What counts as intra-Asia in the
largely LCL container trade, depends on
domestic consumption which is growing but
still comparatively low. Even Air China
Chengdu-Colombo electronic flights are only
technically intra-Asia, as products are
being flown out from Sri Lanka to become
seafreight for Europe.
Even
a top economy like China's, consumption
as a percentage of household income, is
a low at 34 per cent compared to 60-70 per
cent for developed nations.
But
on the plus side, such proportions are expected
to change and have changed with every issue
of every fresh statistical table.
But
with the good news comes bad. Along with
consumer consumption, China suffers labour
cost increases and a resulting migration
of factories to south east Asia. And as
China responds by moving up the value chain,
it suffers acute shortages of skilled labour.
Nor
should the growing influence of nearshoring
be forgotten, that trend towards moving
manufacturing closer to western retail shelves.
While not as cheap as China or south east
Asia, non-union, right-to-work states like
Florida or Latin America where control is
more readily exercised. Ditto for European
manufacturers who are discovering the joys
of Poland and Slovakia.
Nonetheless,
super-cheap Asian countries such as Cambodia,
Indonesia and Vietnam have benefited from
these shifts in production, which while
not contributing to intra-Asia trade as
such, the development increases domestic
consumption of the products China and its
neighbours manufacture.
Vietnam,
Malaysia and Thailand have experienced average
growth increases of 5-6 per cent, which
have fueled similar increases in consumer
confidence and consumption.
Consumption
rates are at 53 per cent of GDP in those
areas - higher than Russia, Brazil and China.
Their population is young, with more than
27 per cent of the population within ASEAN
member countries considered Generation Y
(born from early 1980s to early 2000s).
By 2030, more than half of the estimated
650 million population will be less than
30 years of age.
If
one considers the intra-Asian trade encompassing
container business moving between Saudi
Arabia and New Zealand on an east/west axis,
it is difficult to draw any firm conclusions
other than trends remain upward.
London's
Drewry Maritime Research identifies the
specific countries involved in the trade
and forecast to grow higher than global
growth for all. Specific jurisdictions cited
in the analysis include China, Hong Kong,
Taiwan, Japan, South Korea, Singapore, Malaysia,
Indonesia, Philippines, Thailand, Vietnam
and Cambodia.
One
trend is towards larger ships with global
operators encroaching on the intra-Asian
trade with larger ships to fulfill a combination
of both local and feeder requirements. By
the same token, smaller regional players
have been diversifying more into other trades
and are pulling out of the least profitable
regional routes.
The
presence of global carriers has had a disruptive
influence on pricing. In some trades for
example, the need to re-position empties
to areas of deficit may mean that global
operators can charge relatively lower rates.
The
cascading of much larger and in some cases
ships of 4,500-TEU panamaxes has also led
to overcapacity. Maersk, MOL and OOCL have
all introduced ships of this size on certain
north/south intra-Asian routes
To
meet increasing demand, new port construction
and upgrades of existing facilities are
needed. Intra-Asian ports and trade lanes
suffer congestion because larger vessels,
displaced from Asia-Europe and transpacific
routes, have cascaded to intra-Asia rotations.
One
response has been from Classification society
DNV GL, which has developed wide-beamed,
shallow-bottomed C-Dragon ships to manage
to access high volumes per vessel from ports
inaccessible to deeper draft panamaxes.
With
strong continued growth intra-Asia trade,
the region could become an even larger influence
than most appreciate well into the 21st
century.
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