Political tensions between the US and China are contributing to lower container shipments between the world’s two largest economies, on top of an already-underway reshaping of global trade, according to a major shipping industry boss.
“We are seeing a de-leveraging of trade between the US and China,” Jeremy Nixon, chief executive officer of Ocean Network Express, said at the Capital Link Singapore Maritime Forum. “Many companies in the US are looking to reduce down the amount of imports they have got coming from China.”
The share of boxes hauling everything from cell phones to tables arriving in the US from China has fallen by about 10 percentage points over the past year, said Nixon, whose company is among the top 10 container shippers. As a result, the US is establishing stronger ties with other trade partners including Europe, a trend Nixon says will continue.
The world’s two largest economies have been steadily becoming less reliant on one another for much of the past year. That’s been driven primarily by a broad-based slowdown in the global economy, and it’s been particularly acute for containers as the demand boom that took place during the pandemic reversed.
The decoupling is now being exacerbated by geopolitics, Nixon says. Tensions have flared over issues from Taiwan to the alleged spy balloon that was shot down over the US. President Joe Biden is seeking to sign an executive order that will limit investment in key parts of China’s economy by American businesses.
The slowdown in the China-US route means America will import more from elsewhere. While container freight rates across the board have slumped this year, the decline has been less precipitous in Europe as the US imports more from the continent, Nixon said. Shipping flows from the Mediterranean, India and even Southeast Asia into the US have also been bolstered.