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American Shipper

IHS: SE Asia poised for steady growth through 2020

The industry research and analytics firm forecast more than 30 percent growth in trade between North America and Europe and China and Vietnam.

   Southeast Asia and China will remain trade hotspots for North America and Europe during the next five years, according to IHS.
   The industry research and analytics firm forecast Wednesday that China’s trade with those regions will increase by more than 5 percent per year through 2020, despite the recent slowdown in the Chinese economy and dip in exports.
   “These increases will not be the double-digit rises seen before the 2008 global economic crisis,” Krispen Atkinson, principal analyst at IHS’s Maritime & Trade unit said in a statement. “However, an increase of over 30 percent in the next five years underscores China’s intent to remain a new trade hub-and spoke lynchpin for the rest of the economic world, cementing the Maritime Silk Road Initiative via China and Asia within the emerging market universe.”  
   Vietnam, India and other countries in Southeast Asia are also expected to significantly expand trade output in the next half-decade, aided by recent declines in energy and commodity prices, the firm said.
   Vietnam’s exports will grow 44 percent by 2020, with almost all of that production flowing to North America and Europe, it estimated. Home appliances and mechanical hardware are among the primary goods traded between these regions.
   The country’s containerized exports to the rest of the world topped 2.96 million TEUs in 2014, up from 1.7 million TEUs in 2010, and are expected to reach 4.6 million TEUs by 2020, according to data provided by IHS. Vietnam’s imports are projected to grow from 2.6 million TEUs to 4 million TEUs.
   South Asian economies “have significant industries and service sectors of their own that benefit from cheaper inputs and have currencies that are not coupled to a strengthening U.S. dollar,” Jan Randolph, director of sovereign risk analysis at IHS, said.
   The use of ever-larger container vessels by the international shipping industry will support the growth in trade, but in the near-term has increased cargo capacity beyond demand and contributed to low ocean rates, according to industry experts.
   The firm also said that China’s investments in East Africa over the past decade will pay off in increased two-way trade. The exchange of goods between the regions is expected to increase by 91 percent, with Africa continuing to supply raw materials to China, and China exporting manufacturing goods to East Africa. But China’s investment in highway, rail, and port infrastructure in countries such as Malawi, Mozambique, Zambia and Zimbabwe has also increased regional interconnectivity, which will enable China to offshore production to take advantage of lower operating costs, such as labor, and minimize intercontinental transportation for the local market.