CSCMP's Supply Chain Quarterly
October 16, 2018
Forward Thinking

Global trade and container flow index

Trade gains momentum but growth is still modest.

After slowing in 2012, trade growth in China and the United States saw a modest increase in Q1/2013. Meanwhile, the eurozone's sovereign debt crisis continues to pose significant recessionary risks and Japan's economy remains sluggish.

Global container throughput and global trade gained momentum in Q1 as countries began to overcome the effects of the economic slowdown. Germany and the Netherlands have avoided the recession thanks to their strong exports, which grew by 3.9 percent and 4.1 percent, respectively. In Japan, government spending on post-tsunami reconstruction increased, but weak private investment and persistent deflation have contributed to slower-than-anticipated growth.

Article Figures
[Figure 1] Capgemini Consulting global trade flow index
[Figure 1] Capgemini Consulting global trade flow index Enlarge this image
[Figure 2] Container throughput vs. total trade
[Figure 2] Container throughput vs. total trade Enlarge this image

China's exports and imports exhibited modest growth of 5.5 percent and 2.5 percent, respectively, partly due to declining commodity prices and weaker-than-expected demand from its top two export markets, the United States and the European Union. China's gross domestic product (GDP) is expected to grow as exports, industrial production, and retail sales improve and consumer price inflation abates. Despite a positive outlook in GDP, investors have been moving money out of China as the profitability of domestic companies declines and pessimism about the economy increases. To navigate these challenges, China should retain foreign direct investment, shift away from export-led growth to favor the Chinese consumer, and evaluate the impact of the political transition of China's presidency.

Strengthening U.S. domestic demand is helping to accelerate global trade, although economic problems in Europe and Japan are beginning to take a toll on U.S. exporters and the country's overall trade position. Total trade is expected to increase by 2.6 percent. That's due in part to a 4.5-percent increase in foreign markets, tempered by a lower, 0.8- percent growth rate in domestic markets. With the contraction of state and local government spending, a surge in home prices, and the Dow Jones Industrial Average trading near record highs, investors remain cautiously optimistic about the state of the U.S. economy.

For more about Capgemini Consulting's trade information services, contact Dan Albright, Vice President or Cathy Chinich, Senior Consultant.

Dan Albright is a vice president at Capgemini Consulting. Cathy Chinich is a managing consultant at Capgemini Consulting.

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