What's cool to Millennials in hot climes is stuff from Europe, US and UK
 While the east-west container trade is not what it used to be, there's no doubt about its glorious future according to London's Clarkson Research Services.
The shipbroker and maritime research analysts say that while container trade growth has slowed in recent years, it has still greatly expanded since the turn of the century - a trend that is bound to continue.
And with the growth of brand-driven ecommerce from the Red Sea to the Sea of Japan, as the poorer get richer on the back of urbanisation, European opportunities abound from what can be inferred from the shipping analysis of Clarkson's and that of IHS Global Insight studies as well.
“China and India’s share of world consumption is set to rise from 12 per cent in 2016 to 27 per cent by 2035," said IHS Global Insight's Asia Pacific economist Rajiv Biswa. “We’re also going to see very rapid growth in consumption in emerging Asian markets over the next two to three decades, with Asia Pacific consumption as a share of world consumption expected to rise from 27 per cent in 2016 to 39 per cent by 2035.”
As so many seek to emulate western styles if not immigrate to Europe and America, it is not surprising that cool gear from the west finds ready markets in the east. So while Europe is not alone is providing cool stuff for Millennials, its brands are still top of the pops among young people in the vast intra-Asia market who yearn to be cool. Call it cultural imperialism if you will, but Prada handbags, Marks & Spencer quality products and ubiquitous Ikea furniture have conquered the imagination of Millennials, which will likely prove to be the first truly global youth generation with universality shared tastes.
European goods may no longer be made in Europe, though we may see changes on that front before long, but until that time, these western styles will be shipped throughout the intra-Asia market and find ready buyers via ecommerce - which augurs well for shipping.
In 2016, the container trade was projected to total 181 million TEU, almost thrice that of the year 2000, having grown 6.4 per cent a year. Another thing to consider: Intra-Asia markets tend to be dominated by less-than container load traffic, highly suited to smaller volumes going to smaller places - again, via ecommerce.
This century has seen significant growth in global container trade driven by increased volumes across a range of trades, though some have seen faster growth than others. In 2000, east-west trade totalled 25.3 million TEU, accounting for the largest part. This trade growth was rapid in the 2000s, supported by outsourcing of manufacturing from the west to Asia, particularly China.
While western domestic demand has faded since the 2008 financial crisis with Asia-Europe trade down three per cent in 2015, with only limited volume growth recorded on this route this year. Overall, east-west trade grew 4.7 per cent a year in 2000-16, and its share of global trade fell from 38 to 29 per cent.
Meanwhile, the intra-Asian trade market's share of global trade went from 32 per cent of total volume in 2000 to 41 per cent last year. This year, intra-regional trade is expected to go to 73.5 million TEU, the biggest sea trade in the world. From 2000-2016, intra-regional trade grew 8.1 per cent a year, or 46 per cent of total growth in global volume.
This has been supported by the rapid expansion in intra-Asian volumes, reflecting both firm economic growth in developing Asian countries and the rise of the region as the "workshop of the world", now featuring the multi-location assembly of manufactures.
While economic turbulence in China saw intra-Asian trade growth slow to three per cent in 2015, expansion has returned to more robust levels in 2016. Non-east/west trade has risen 8.6 per cent since 2000. This was most pronounced in trade with India and the Middle East, though recent low oil prices have limited Middle Eastern imports. More cheerfully, trade from Saudi Arabia to Japan is expected to hit 23.5 million TEU in 2016, or a walloping 13 per cent of global trade.
While north-south trade increases lagged behind in 2000-16, averaging five per cent a year, that still represents substantial growth. And as measures in the west are taken to boost private sector, giving it more head and encouraging new hires, demand in Europe and America will likely to pick up, arresting slower growth in South America and Africa, caused by the current slump in commodity markets.
However primitive some African and Latin American regions appear today, electronic connectivity is reaching out to the poorest, sparking demand that can best be served through ubiquitous mobile phones. Rapid growth in consumer spending and online sales will be a primary driver of growth in cargo movement and logistics services in these regions, and this will be driven by Millennials and their preference for things western.
The Chinese ecommerce market is already the world's biggest with 400 million Chinese consumers buying online. Its online retail sales in the first quarter of 2016 hit US$158 billion, up 27.8 per cent year on year.
Indian ecommerce sales have been estimated to have risen from $4 billion in 2009 to $40 billion in 2016. In southeast Asia, ecommerce, buoyed by the rapid growth in the size of the middle class, is also rising fast. IHS Global Insight forecasts that Indonesia will grow at about five per cent a year over the next decade, with GDP forecast to reach $3.8 trillion by 2030, up from $930 billion in 2016.
“The Indonesian ecommerce market is already estimated to be worth $6 billion in 2016, dominated by online sales to Indonesian consumers for travel-related spending, notably on airlines and hotels,” said the IHS Global Insight economist.
Supporting the expansion of consumer spending will be the development of more manufacturing in the region, with southeast Asia set to continue to enjoy growth in the low-end manufacturing segment, including products such as garments and electronics.
Vietnam has seen the annual output value of its electronics sector rise from $6.9 billion in 2011 to $45.8 billion last year. “China’s rising wage costs make it difficult for coastal provinces to compete at the lower end of the manufacturing sector,” said IHS's Mr Biswas. “This is an inevitable consequence of becoming a middle income economy, but China’s manufacturing sector is also shifting towards more complex products.” Ditto India, which is increasingly sloughing off low-end manufactures to Bangladesh and Pakistan.
All of which creates demand for cool European gear - even if it is not actually made in Europe. With projected growth of 7.5 per cent per year to 2020, India will be increasingly important in terms of the region’s GDP growth. “A key objective of the Indian government’s focus on infrastructure and manufacturing is to boost the manufacturing sector share of total GDP,” said Mr Biswas. “This is currently just 15 per cent in India, well below that of east Asian countries including South Korea and China, where the share is about 30 per cent.”
There are early signs that the Indian government’s initiatives are starting to result in stronger investment inflows, said Mr Biswas. Foxconn recently announced a $5 billion investment plan to build electronics factories in India.
So, global trade has made a great leap forward since 2000 and intra-Asian trade has won its place in the sun. While volume expansion may be underperforming at present, it is still worth remembering just how far and wide container trade has grown this century and how big a role Millennials desire to be cool will be driven by European tastes. |
