Shipping analyst sees brighter 2012 for Asia-U.S. trade

Trenck

   A leading shipping analyst said last week he expects the transpacific trade to perform better in 2012 than it did in 2011.
   “I feel better about the U.S. short-term than many other areas of the globe,” Charles de Trenck, founder of Hong Kong-based Transport Trackers, wrote in his 2012 forecast. “The political cycle is also bound to distort the picture – and may hurt prospects for needed deeper budget cuts. The U.S. in 2012 will be a year of politics when it would be tough to cut spending. We’ll have to see also what the likes of Wal-Mart have to say, which will be later.
   “Since Europe growth was a little ahead of U.S. growth in 2011, the starting position is to expect U.S. demand to be at a lower hurdle to beat Europe. But Europe is more diverse. Also the politics of economic stimulus policies are still lagging the U.S.. As of end-2011, I am targeting (roughly of course) 3 to 5 percent growth in TEU volumes into the U.S. from Asia and 3 percent growth into Europe from Asia. Rates should be flat to higher as 2012 proceeds (ex fuel),” he said.
   De Trenck noted wryly that “forecasts are generated mostly to be wrong, although understanding where we are wrong is useful.”
   Regarding China, de Trenck said the country is “between a rock and a boulder.”
   “Wages are going to go 10 to 20 percent higher in 2012, properties may be flat in Tier 1 cities, lending could be tight, but talk will have to be on letting loose on policy a bit to dampen potential protests,” he wrote. “All the while China will still need to build a proper base for growth. Letting the economy rip in 1H12 would be a mistake, and inflation would certainly develop into a bigger problem in such a scenario.”
   While there’s been a focus on inflation in China, de Trenck said the global economy has shown some deflationary tendencies, which should be worrisome to shipping lines.
   “Deflation is bad for assets, and those who bought ships, for instance at higher levels,” he said. “Many of us suspect that the desired effect is inflation. But inflation that starts off slow and quiet could become a risk later if the (quantitative easing) and money supply expansions are not somehow reversed.”