The election of Donald Trump is sending shock waves across the shipping industry, which fears the antitrade rhetoric that took center stage during the campaign will further hurt ship operators as they try to deal with the worst down-cycle in 30 years.
"There is little detail about Trump's trade policy, but his overall protectionist, anti-globalization stance will likely hurt shipping-an industry that thrives on low trading barriers for goods," said Basil Karatzas, a New York-based maritime ad adviser who works with the industry’s biggest names. "In the short term, the shock effect to the markets will likely lead to lower trading volumes at a time when shipping companies report earnings in bright red numbers."
Mr. Trump has repeatedly criticized global trade deals like the North American Free Trade Agreement and the Trans-Pacific Partnership, a trade agreement to lower or eliminate tariffs between the U.S. and 11 other countries, including Japan and Vietnam.
This doesn't help the shipping industry at a time when global trade is forecast to grow by just 1.7% this year, marking the slowest pace since the 2008 financial crisis, according the World Trade Organization.
Container ships move more than 90% of U.S. exports and imports ranging from clothes and electronics to industrial equipment, food and furniture.
The world's biggest operators are counting heavily on the U.S. to pull them out of the crisis, as growth prospects here are stronger than in Europe and most of Asia.
Shares of Danish Conglomerate A.P. Moller-Maersk A/S, Maersk Lines' parent, fell 4.25% in Copenhagen trading. Maersk Lines moves about 15% of global seaborne freight and is seen as a barometer of world trade.
"The U.S. is an important market for us, and a big influence across the world," a spokesman for Maersk Line, the world's biggest shipping company in terms of capacity, said. "It's too early to speculate about how the election result will impact our business."
Industry analysts say one concern is whether the new U.S. administration pushes protectionist policies, and if major trading partners like China will do the same.
"The greater risk to shipping is if such an action causes a ripple effect of other countries taking similar action," said Lars Jensen, chief executive of Copenhagen-based SeaIntelligence Consulting. "Over the medium to long term, that would adversely impact both shipping and port industries globally."
China is the U.S.'s biggest trading partner, with total trade between the two countries amounting to $416 billion this year, according to U.S. government figures.
But analysts involved in Chinese seaborne trade believe Mr. Trump won’t move to rattle trade relations with major trading partners.
"The dynamics of international trade can't be suddenly canceled, even by a radical change in the political agenda of a superpower like the U.S.," said George Xiradakis, managing director of Athens-based XRTC business Consultants Ltd. and an adviser to China Development Bank on shipping matters. "There will be no games played with China, as it will be to the detriment of the U.S. and the western world."
Source: Wall Street Journal
Read More ...