FEBRUARY 2016 2016 CONTAINER SHIPPING OUTLOOK · 2016 CONTAINER SHIPPING OUTLOOK| FEBRUARY 2016 Agenda 2 •U.S. Exports •Takeaways •What happened in 2015 •The dollar and exports

2016 CONTAINER SHIPPING OUTLOOK

Assessing the demand fundamentals

FEBRUARY 2016

Mario O. Moreno, Senior Economist Global Trade

IHS Maritime & Trade [email protected]

(973) 776-7850

@MarioMoreno_JOC

2016 CONTAINER SHIPPING OUTLOOK| FEBRUARY 2016

Agenda

2

• Takeaways • U.S. Exports

• What happened in 2015

• The dollar and exports

• 2016 outlook

• U.S. Imports

• What happened in 2015

• 2016 outlook

• China and the trans-Pacific

• Vietnam’s rising power


3

U.S. Imports Will the upward trend continue?


U.S. imports on expansion mode but growth has slowed High inventory levels, lower consumer spending triggered destocking in 2H15

8.6%

3.1%

6.6% 5.2%

1.0%

8.2%

4.7% 4.0%

5.7%

-1.1%

4Q14 1Q15 2Q15 3Q15 4Q15

U.S. Containerized Imports, Quarterly Year-over-year percent change

Total imports Imports from China

Source: IHS JOC Container Shipping Outlook

• U.S. imports from China were down in Q4 for the first time since 2Q13.

• Sales did not meet expectations.

4


U.S. imports rose for the sixth consecutive year Imports up 4.0% in 2015, somewhat better than last year’s TPM forecast of 1.7%

1.50 1.06

0.54 0.33 0.31 0.16 0.15 0.03 0.03 0.02

0.00 -0.03

NE

Asia

SE

Asia

No

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Ind

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Sub

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Oce

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Mid

Ea

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Contribution to U.S. Containerized Imports Growth, 2015 (In percentage points)

• East Asia and Europe contributed

most to growth.

• Demand for major consumer goods

was solid.

• As the housing market recovers,

demand for home goods increase.

Consumer goods imports 2015 Growth

Furniture +6%

Plastic products, misc. +8%

Toys +8%

Footwear +3%

Sheets, towels, blankets +10%

5



U.S. containerized imports to keep the uptrend in 2016 Imports are forecast to grow 5.3% in 2016 and total 20.8M TEUs – a new peak

2.7% 3.2%

6.1%

4.0% 5.3%

2012 2013 2014 2015 2016F


• NE Asia to make biggest contribution

to overall imports growth: 2.65 pp.

• Improving consumption of goods,

subdued imports prices.

• China’s share of total imports at

46.7%, down 2 pp. from 2010.

Percent change 2014 2015 2016F

Real GDP 2.4 2.4 2.4

Real spending on goods 3.3 3.8 4.1

Import prices (no oil) 0.1 -2.8 -2.9

Existing home sales -3.0 6.3 1.4

New light vehicles sales 5.8 5.4 2.5

6


Asia – U.S. trade to further expand in 2016 U.S. imports from Asia forecast to grow 5.5% in the year and total 15.2M TEUs

1.5

3.0

5.8

3.9

5.5

0

2

4

6

8

10

12

2012 2013 2014 2015 2016F

2016 growth forecast for Asia-U.S. trade

Pre-recession, 2000-07: 10%

2.82

0.85

0.41

0.0 1.0 2.0 3.0

China

Vietnam

Korea

percentage points

Contribution to percent change in Asia-U.S. trade


7

• Demand will be driven by the consumer sector.

• China to make greatest contribution, adding 2.82 pp. to growth.


China still King in the trans-Pacific China’s share of Asia-US trade steady while share of rest of NE Asia falling

64.5% 64.5%

18.1% 16.3% 12.4% 13.8% 5.0% 5.4%

2007-2011 2012-2016

Percent Share of Asia – U.S. Trade: China vs. Rest of Asia

China NE Asia (exc. China) SE Asia India Sub.

Source: IHS PIERS

• FDI in China’s manufacturing sector fell from accounting for 70% of total FDI in

2002 to 33% in 2014.

• China upgrading its manufacturing sector, …… and so is Vietnam!

• Increasing investment in Vietnam’s electronics manufacturing sector by Korean

and Japanese firms.

8


Vietnam’s sourcing power expanded at remarkable pace In 2015, Vietnam topped Korea to become 2nd largest supplier of containerized

goods to U.S.

10

7 6 6 6

5 4

3 2 2

0

2

4

6

8

10

12 -

200

400

600

800

1,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016F

Ran

k

In t

ho

usa

nd

s o

f T

EU

s

Rise of Vietnam as a Source Country to the U.S.

U.S. imports from Vietnam in TEUs Vietnam's source country ranking


• Over 2007-2016, U.S. imports from Vietnam will have grown at 10% a year

• Electricity production, port capacity must expand to keep up with demand.

9


10

U.S. Exports Another down year?


U.S. exports fell in 2015 for second consecutive year Exports down 3.8% in 2015, in line with last year’s TPM forecast of a drop of 4.4%

-2.52

-0.56 -0.50 -0.37 -0.25 -0.20 -0.08 -0.07

0.13 0.12 0.13 0.62

NE

Asia

No

rth

Eu

rop

e

EC

SA

me

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Me

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Afr

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Mid

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WC

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SE

Asia

Ind

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Sub

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Contribution to U.S. Containerized Exports Growth, 2015 (In percentage points)

• Last time exports down 2

consecutive years was in late 90’s.

• NE Asia subtracted most from

growth. Central America added.

• Subdued global manufacturing

sector dragging the trade.

Raw Materials Exports 2015 Growth

Paperboard -5%

Logs & lumber -11%

PVC resins -8%

Aluminum rods -32%

Pig iron -25%

11



Containerized exports threatened as dollar rallies The U.S. dollar gained 12.5% in value (average) in 2015

12


U.S. containerized exports to fall for 3rd successive year Exports are forecast to decline 1.5% in 2016 and total 11.3M TEUs

0.0%

2.7%

-2.3% -3.8%

-1.5%

2012 2013 2014 2015 2016F


• Northeast Asia will subtract most

from growth (-0.69 pp.)

• Subpar global economic activity.

• U.S. dollar: a peak value will be

reached in 2Q16.

Percent change 2014 2015 2016F

World GDP (no NAFTA) 2.7 2.5 2.6

Emerging markets GDP 4.4 3.8 3.8

World (no US) Ind. Prod. 2.5 1.5 2.3

China Ind. Prod. 8.3 6.1 5.8

U.S. dollar 3.1 12.6 7.5

13


U.S. – Asia trade to see a modest decline in 2016 U.S. exports to Asia forecast to slide 0.8% in the year, and total 6.3M TEUs

-0.6%

3.2%

-3.0% -4.2%

-0.8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

2012 2013 2014 2015 2016f

2016 growth forecast for Asia-U.S. trade

Pre-recession, 2000-07: 8%

-1.1

-0.3

-0.2

-1.5 -1.0 -0.5 0.0

Japan

China

Korea

percentage points

Contribution to percent change in Asia-U.S. trade


14

• Weak demand, unfavorable exchange rates.

• Japan, China, and Korea to subtract from growth.


Takeaways

• U.S. imports forecast to continue

expanding this year on the back of solid

domestic demand and subdued import

prices.

• China will continue to be the main driver

of growth in the Asia-U.S. trade despite

source-shifting activity within the region.

• U.S. exports forecast to see a modest

decline on subpar global economic

activity, strong dollar.

15


THANK YOU!

Mario O. Moreno

Senior Economist, Global Trade

IHS Maritime & Trade

[email protected]

(973) 776-7850

@MarioMoreno_JOC

16

FEBRUARY 2016 2016 CONTAINER SHIPPING OUTLOOK · 2016 CONTAINER SHIPPING OUTLOOK| FEBRUARY 2016 Agenda 2 •U.S. Exports •Takeaways •What happened in 2015 •The dollar and exports

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