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MANY
have called this period "the Asian
Century," and continued economic growth
is a major component in terms of fulfilling
that potential, writes Stacy Hylton in the
blog of the Capital Distribution Services,
a division of Hitachi Transport System Group.
"Consider
that according to the Shipping Gazette,
annual trade between the Associated Southeast
Asian Nations (ASEAN) and China has grown
by 10 per cent annually since 2008,"
she writes.
Compare
this figure to an increase of just one per
cent annually since 2008 in container exports
from China to the US and Europe, and it
becomes clear what all the fuss is about.
Ms
Hylton then delves into more numbers illustrating
the growth in intra-Asia trade, the fastest
growing trading area worldwide. Intra-Asia
trade counts for 25 per cent of Asia's total
of US$6 trillion in annual exports and this
number is expected to increase.
China
is the major driver in this growth with
37 per cent of the total ASEAN trade taking
place with China with 1.4 million TEU moved
in intra-Asian trades by November 2013.
This statistic is nearly double the container
volumes moved in 2007
China,
of course, has been the major force behind
the growth in intra-Asian trade to the point
that analysts have referred to this period
as "the Asian Century." For very
good reasons, it begins within China itself.
China is experiencing a shift in their economy
from almost exclusively export-driven to
one that is consumer based. In terms of
consumption as a percentage of household
income, China is still comparatively low
at 34 per cent compared to 60-70 per cent
for developed nations. But their percentage
is expected to grow steadily.
Along
with consumer consumption, China has experienced
simultaneous increases in labour costs along
with shortages of skilled labour. These
factors have prompted manufacturers to move
production of certain low-value goods to
other parts of Asia. As a result, other
Asian countries such as Cambodia, Indonesia
and Vietnam have benefited from the shifts
in production.
Shifts
in manufacturing from China to Southeast
Asia have influenced economic growth in
the region. For example, Vietnam, Malaysia
and Thailand have experienced average growth
increases of five to six 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.
By 2030, more than half of the estimated
650 million population will be less than
30 years of age.
China
is not the only factor influencing intra-Asia
growth. The ASEAN Free Trade Agreement (AFTA)
and other bilateral trade agreements between
countries within the region have positively
contributed to growth. Additionally, there
are two major proposed trade deals currently
in negotiation.
If
negotiated to completion, the Regional Comprehensive
Economic Partnership (RCEP) would become
the largest trading pact in the world and
could include areas totaling 49 per cent
of the world's population and 30 per cent
of the world's GDP. The Trans-Pacific Partnership
(TPP), under negotiation since 2005, includes
12 nations.
But
China has proposed a separate trade agreement
called the Free Trade Area of the Asia Pacific
(FTAAP). No matter which of these agreements
come to fruition, the impact on intra-Asia
trade will be unprecedented.
How
will the transport respond? Growing container
volumes on intra-Asia routes have put undeniable
pressure on existing infrastructure. To
meet increasing demand, new port construction
and upgrades of existing facilities are
in order, similar to what is occurring related
to the finalisation of the Panama Canal
expansion project.
Ports
in the intra-Asia trade lanes are already
challenged with congestion in part because
larger vessels, displaced from Asia-Europe
and transpacific routes, have already begun
calling. This practice of vessel cascading
is likely to continue and will compound
congestion problems.
In
response to the need for wide-beam, DNV
GL has developed the C-Dragon with a shallow
draft design. Designed with intra-Asia trade
in mind, the vessel type features a high
ratio of on-deck to total TEU capacity and
fuel efficiency. Both traits provide advantages
over cascading older vessels.
With
strong continued growth in intra-Asia trade,
the region could become an even larger influence
than once has realised on the global economy,
well into the 21st century.
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