U.S. and China ‘have much to lose’ if trade fight not sorted out, DHL Group says

(Photo: DHL)

Freight forwarder’s leading indicator of trade is still positive, but growth has slowed with ocean freight showing the most decline.

The trade outlooks for the U.S. and China are positive, but slowing as tariffs and other disputes plague the two countries, says DP DHL Group (Xetra: DPW).

As the world’s largest forwarder by volume, the Bonn-based company has good visibility into the world’s freight volumes. And it makes that view public through its “global trade barometer,” an index of air and ocean freight moving in and out of the world’s largest economies.

Tim Scharwath, chief executive of DHL Global Forwarding and Freight, says the most recent index reading shows, “we are still growing in trade. However, it has slowed down a bit.”

Global trade will top the agenda this week as leaders of the world’s two largest economies meet at the G20 Summit in Buenos Aires. As the stock market drops and the chorus of tariff foes grows, President Donald Trump may be more willing to negotiating trade differences between the U.S and China.

For the U.S., DHL sees the overall trade index sitting at 61 in November, down from the 68 level seen in June. China, meanwhile, saw its trade index drop to 58, down from 59 in October.

“Both countries’ momentum of growth is slowing only moderately . . . even though both countries would have much to lose if their trade conflict escalated,” DHL said.

Both air and ocean freight are slowing, with declines in U.S. ocean freight most noticeable, Scharwath says.

“U.S. ocean trade is down strongly this month,” he said.

The world’s second largest ocean freight forwarder, DHL has seen shippers rush goods into the U.S. ahead of higher tariffs on $200 billion worth of Chinese goods starting Jan. 1.

He says shippers are “filling up warehouses” with goods to have a cushion once tariffs kick in and new overseas suppliers can be found. Indeed, the Port of New York and New Jersey just reported that October import volumes hit a record.

But the outlook for U.S. exports is the main contributor to the diminished outlook as China’s tariffs on $60 billion in U.S. goods hits raw materials exports, such as soybeans. DHL says the outlook for raw materials is “slowing down slightly compared to previous updates.”

While its air freight index is softer in November, DHL says the outlook for the U.S. air trade is “consistently positive with a slightly better prognosis for air imports than for exports.” Scharwath attributes the positive outlook to peak seasonal demand, as well as strong spending on consumer electronics.

“In high technology, the U.S. consumer is still buying,” Scharwath said.

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Michael Angell, Bulk and Intermodal Editor

Michael Angell covers maritime, intermodal and related topics for FreightWaves. His interest in transportation stretches back several generations. One great-grandfather was a dray horseman along the New York waterfront and another was a railway engineer in Texas. More recently, Michael has written about the shipping industry for TradeWinds, energy markets for Oil Price Information Service, and general business topics for FactSet Mergerstat and Investor's Business Daily. When he is not stuck in the office, he enjoys tours of ports, terminals, and railyards.