The fact that Friday’s Economic and Commodity Outlook session at the Geneva Dry Conference began with empty seats on stage was rather fitting, as metaphors are being used to highlight today’s tortuous trade environment – United Nations Trade and Development Technology -Shamika Thirimanne, Director of Logistics, stuck in traffic jams everywhere, just outside the World Trade Organization building. She was able to take her seat alongside moderator Splash editor Sam Chambers 10 minutes into the debate, which was touted as setting the stage for many other sessions that followed that day.
Trafigura’s chief economist, Saad Rahim, was asked to begin the process by giving his views on where the global economy is headed over the next 48 months.
“The U.S. economy is not only firing on all cylinders, it’s finding new cylinders to fire,” Rahim told delegates, noting that “pockets of growth” have recently materialized. He also highlighted other areas where:
Rahim argues that too many headlines focus too strongly on China’s troubled real estate sector and that commodity import data shows there is more to the health of the People’s Republic than apartment sales. did. China hit record highs in demand for copper, aluminum, oil and gas last year, he noted.
“The economy is not suffering as much as the headlines and sentiment suggest,” Rahim said, noting that infrastructure spending and manufacturing remained “very strong.”
Similarly, Rahim said the Indian economy is showing strong growth and some “green shoots” are emerging in Europe.
“Simply put, I think the global economy is actually very healthy and starting to regain momentum, but it needs a little bit more of a boost from China to really get off the ground. If they decide to cut rates at some point, I think that will accelerate everything further,” Rahim concluded.
As soon as the United Nations’ Mr. Thirimanne took to the stage, he was pressed into action for his views on the global economy.
“Global trade is resilient. Steady but slow,” she said, adding that global merchandise trade volume will grow between 2.5% and 2.6% this year and reach 3.3% in 2025. This figure is expected to increase, in line with global trade volumes over the past 20 years. Excluding the economic downturn experienced due to the coronavirus pandemic.
Turning to maritime trade, the United Nations agency projects that maritime trade will grow by about 2.1% from 2024 to 2025, below the 20-year average trend of 2.8%.
The discussion then turned to some of the variables facing the dry bulk shipping industry in 2024, including diversions from the Red Sea and Panama Canal.
Dr Roar Adlund, head of global research at brokerage SSY, said the Red Sea switch would add “a bit of spice” to a market that was already “fundamentally very tight”. Overall, issues off Panama and Yemen increased overall ton-mile demand by 1.4%, according to SSY estimates.
“Every time there is an infrastructure inefficiency in the supply chain, it’s a good thing for shipping, including dry bulk,” said Christopher Rex, head of sustainability and research at Denmark’s Ship Finance Bank. Rex admitted that the recent increase in iron ore and coal shipments had surprised many.
Rex expressed concern about the potential for a “toxic cocktail” to be brewed due to huge debts from China’s real estate sector, and urged participants to keep an eye on square meter prices in China’s major cities in the coming months. I urged them to do so.
SSY’s Adland then showed off his massive predictions for various trades in one of the most photographed slides of the day. Adland said SSY is “quite optimistic” about the outlook for dry bulk, predicting total market-wide gross ton-mile growth of 3.5%.
Danish Ship Finance’s Rex is bullish on the outlook from a supply perspective, saying a very important driver of change is that global economic growth is reducing seaborne trade volumes, with growth in volume rather than distance. I warned you that there is. As for his long-term outlook, Rex was less positive about ships larger than Panamax, but remained “fairly positive” about all small ship segments carrying minor bulk.
From the audience, Manu Labano, co-CEO of intermediary giant IFCHOR Galbraiths, gave his views on the dry bulk market in the year ahead, saying that for at least the next two years the market will be dominated by larger vessels. He said it was advantageous.
The panelists were then invited to comment on what the results of November’s US election meant for the sector, giving them a good 10 minutes of geopolitical game play.
“I don’t think anyone will get in trouble for being too anti-China this election season,” Trafigura’s Rahim said, acknowledging there were varying degrees of intensity between Biden and Trump. Notably, Rahim noted that U.S. manufacturing construction has increased by nearly 200% since the end of 2021.
“If you look at the growth projections, it’s no longer just about China,” Rahim said, highlighting growth in imports of primary products from countries such as India and Southeast Asia.
The UN’s Silliman said ongoing supply chain diversification is all good as long as it is based on sound economic reasons rather than geopolitics, and that the risks are that supply chains become longer and more complex. He said that trade efficiency would be lost.
“Unfortunately, I say that anything that makes shipping more inefficient is good for us: human suffering, wars, cold wars, hot wars, proxy wars, sanctions, trade wars, etc.”SSY Adland admitted.
Geneva Dry, the world’s leading goods transport conference, will be held on April 28th and 29th next year, with a limit of just 800 participant passes. Tickets are currently on sale here.