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2016 CONTAINER SHIPPING OUTLOOK
Assessing the demand fundamentals
FEBRUARY 2016
Mario O. Moreno, Senior Economist Global Trade
IHS Maritime & Trade Mario.Moreno@ihs.com
(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
2016 CONTAINER SHIPPING OUTLOOK| FEBRUARY 2016
3
U.S. Imports Will the upward trend continue?
2016 CONTAINER SHIPPING OUTLOOK| FEBRUARY 2016
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
2016 CONTAINER SHIPPING OUTLOOK| FEBRUARY 2016
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
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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
Source: IHS JOC Container Shipping Outlook
2016 CONTAINER SHIPPING OUTLOOK| FEBRUARY 2016
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
Source: IHS JOC Container Shipping Outlook
• 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
2016 CONTAINER SHIPPING OUTLOOK| FEBRUARY 2016
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
Source: IHS JOC Container Shipping Outlook
7
• Demand will be driven by the consumer sector.
• China to make greatest contribution, adding 2.82 pp. to growth.
2016 CONTAINER SHIPPING OUTLOOK| FEBRUARY 2016
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
2016 CONTAINER SHIPPING OUTLOOK| FEBRUARY 2016
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
Source: IHS JOC Container Shipping Outlook
• 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
2016 CONTAINER SHIPPING OUTLOOK| FEBRUARY 2016
10
U.S. Exports Another down year?
2016 CONTAINER SHIPPING OUTLOOK| FEBRUARY 2016
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
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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
Source: IHS JOC Container Shipping Outlook
2016 CONTAINER SHIPPING OUTLOOK| FEBRUARY 2016
Containerized exports threatened as dollar rallies The U.S. dollar gained 12.5% in value (average) in 2015
12
2016 CONTAINER SHIPPING OUTLOOK| FEBRUARY 2016
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
Source: IHS JOC Container Shipping Outlook
• 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
2016 CONTAINER SHIPPING OUTLOOK| FEBRUARY 2016
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
Source: IHS JOC Container Shipping Outlook
14
• Weak demand, unfavorable exchange rates.
• Japan, China, and Korea to subtract from growth.
2016 CONTAINER SHIPPING OUTLOOK| FEBRUARY 2016
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
2016 CONTAINER SHIPPING OUTLOOK| FEBRUARY 2016
THANK YOU!
Mario O. Moreno
Senior Economist, Global Trade
IHS Maritime & Trade
Mario.Moreno@ihs.com
(973) 776-7850
@MarioMoreno_JOC
16
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