Despite Global Market Rout, Huge Rise in Trade from Asia to North America and Europe Expected over the Next Five Years, IHS S...
August 26 2015 - 12:00AM
Business Wire
East Africa-China trade routes fastest growing; strengthening
trade ties between Southeast Asia and North America
Trade from China and Southeast Asia to North America and Europe
is expected to boom in the next five years, according to new
analysis released today by IHS Inc. (NYSE: IHS), the leading global
source of critical information and insight.
The World Trade Service of IHS Maritime & Trade forecasts
that China’s trade will continue to increase by more than 5 percent
per year between 2015 and 2020. This positive medium-term trade
growth comes despite more recent setbacks caused by the marked
economic slowdown in China and weaker growth among other emerging
markets in the current and near-term.
“These increases will not be the double-digit rises seen before
the 2008 global economic crisis,” said Krispen Atkinson, principal
analyst at IHS Maritime & trade. “However, an increase of over
30 percent in the next five years underscores China’s intent to
remain a new trade hub-and spoke lynchpin for the rest of the
economic world, cementing the Maritime Silk Road Initiative via
China and Asia within the emerging market universe.”
Bigger ships
One new trend is the move towards larger container ships to
streamline the supply chain. The four alliances that dominate
east-west trade are pushing the trend towards containerships
capable of carrying 20,000 boxes (20 foot equivalent units), in
their quest to reduce unit costs with ever more efficient vessels.
Current container ships hold around 13,000 boxes, so the new
super-containers capable of transporting over 50 percent more
cargo. Their push has meant further capacity has become available
in the trade.
Southeast Asia-North America trade boom
“China may be the major powerhouse in the region, but Southeast
Asia is making significant headway,” Atkinson said.
Vietnam’s exports are estimated to increase by 44 percent by
2020. IHS forecasts a 44 percent increase in trade between Vietnam
and North America and a 43 percent increase in trade between
Vietnam and Europe in the next five years. “In terms of actual
cargo, the figures are still low when compared with China’s, but
these are still huge jumps for these economies,” Atkinson said.
Trade between these two regions is made up of manufactured
goods, such as home appliances or mechanical hardware.
“Vietnam, India and many of the South Asian economies stand to
benefit from recent energy and commodity price falls as net
importers of these goods,” said Jan Randolph director of sovereign
risk analysis at IHS. “They have significant industries and
services sectors of their own that benefit from cheaper inputs and
have currencies that are not coupled to a strengthening US
dollar.”
East Africa-China trade boom
Trade routes from China to Africa are expected to see a marked
increase over the next five years, with the highest growth expected
to be seen from the East African to China route, incorporating
Malawi, Mozambique, Zambia, and Zimbabwe.
“Trade between East Africa and China is expected to increase by
91 percent by 2020,” Atkinson said. “It’s all around manufactured
goods. East Africa is becoming a new hub for the Chinese.”
Chinese leadership has publicly announced its commitment to
develop infrastructural and to promote regional integration in East
Africa. “In the coming years, China’s relationship with East Africa
will change,” said Natznet Tesfay, head of sub-Saharan Africa
analysis at IHS County Risk. “Right now, the focus is on importing
raw materials and exporting manufactured goods. But, Chinese
investments in enhancing regional interconnectivity will enable it
to take advantage of comparatively lower operational costs and to
onshore manufacturing activity in East Africa.”
About IHS
(www.ihs.com)
IHS (NYSE: IHS) is the leading source of insight, analytics and
expertise in critical areas that shape today’s business landscape.
Businesses and governments in more than 150 countries around the
globe rely on the comprehensive content, expert independent
analysis and flexible delivery methods of IHS to make high-impact
decisions and develop strategies with speed and confidence. IHS has
been in business since 1959 and became a publicly traded company on
the New York Stock Exchange in 2005. Headquartered in Englewood,
Colorado, USA, IHS is committed to sustainable, profitable growth
and employs about 8,800 people in 32 countries around the
world.
IHS is a registered trademark of IHS Inc. All other company and
product names may be trademarks of their respective owners. © 2015
IHS Inc. All rights reserved.
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