Global Economic Outlook

The maritime industry in the Western Hemisphere is indirectly affected by national economies all around the globe. A look at shifting trade patterns and liner shipping consolidations can provide some insight into how other economies directly affect us and which nations are more likely to have an impact.

* By Sandy Smith *

If the global economy could have been boiled down to one word as 2019 turned, the answer would have been “uncertain.”

But one thing is definite: “Uncertainty is not the friend of any type of stable economic growth,” said Dr. John Martin, president of Martin Associates.

The reasons for instability are almost too numerous to name, but Gene Seroka, executive director of Port of Los Angeles, points out some of the more notable ones: “The volatility in equity markets, the seemingly jagged edge of on-again, off-again trade talks and the potential for isolation.” The end result has been “a real up and down in 2018 of our supply chain and international trade, with abrupt policies where many orders have been advanced, and that’s putting a crunch on our supply chain.”

For instance, when it became clear that the United States was going to launch a trade war with China, manufacturers rushed to get product onto vessels, which caused a glut of supply that is just now working its way out of the market, Seroka said.

Determining which way the economy might pivot next is something of a guessing game, and port experts and consultants all have indicators they are watching.

“As you look at the major trading blocs, Asia, North America and Europe, the critical things to watch are consumer spending, the supply chain manufacturing indices that are produced, trade policy and central bank policy,” said Jim Brennan, partner, Capstan Consulting. Brennan anticipates lower growth expectations. “I could see trade falling below 1.5 percent over the next 12-24 months. The evidence is mounting that consumer spending is reined in in China and the European consumer is far from robust. While the U.S. consumer has done incredibly well in the second half of 2018, it would appear that consumer confidence is on the wane.”

Separating the economy from a dynamic shift in global politics is not easy. That is something that Jim Pyburn, director of business development, Port Everglades, keeps his eye on. “When you look at what’s going in the United States with the ‘America First’ policy out of Washington, some of the other markets are also looking at more internalizing and retreating within. For example, China’s economy is slowing partially due to U.S. tariffs. Britain’s exit from the European Union and Italy’s fiscal troubles along with Germany’s falling production all add to the possibility of impacting the global market.

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