The current WTOI reading of 100.3 is below the previous value of 101.8 and just above the baseline value of 100 for the index, signaling an easing of trade growth in the coming months in line with medium-term trends, the WTOI said.
“The loss of momentum reflects weakness in component indices, including export orders and automobile production and sales that could be a result of the ratcheting up of trade tensions,” the report noted. The latest results are generally in line with the WTO’s most recent trade forecast issued in April that predicted a slowing of merchandise trade volume growth to 4.4% this year from 4.7% in 2017.
“Rising trade tensions continue to pose risks to the trade forecast and will be monitored closely going forward,” the report said.
The moderation in the overall WTOI index was driven by export orders—which have been on a steady decline this year—plus automobile production and sales that have risen slightly recently but remain below trend. Electronic components stayed above trend, while agricultural raw materials moved from below trend to on trend.
The merchandise trade volume index was flat. The indices for air freight and container port throughput remain above trend, but growth in both areas “appears to be past its peak,” the WTOI noted.
The latest data from the International Air Transport Association (IATA) for global air freight markets showed that demand, measured in freight ton kilometers, rose 2.7% in June compared to the a year earlier. This continues the slowdown in air cargo growth that began earlier in 2018, IATA said. Growth for the first half of 2018 stands at 4.7%, less than half the growth rate in 2017.
“Air cargo continues to be a difficult business with downside risks mounting,” Alexandre de Juniac, IATA’s director general and CEO, said. “We still expect about 4 percent growth over the course of the year, but the deterioration in world trade is a real concern. While air cargo is somewhat insulated from the current round of rising tariff barriers, an escalation of trade tension resulting in a reshoring of production and consolidation of global supply chains would change the outlook significantly for the worse.”
On the ocean, Drewry’s latest assessment for May showed the global container port throughput index increased more than five points compared to April and reached 130.6 points. On an annual comparison, the index is almost five points higher than the May 2017 level of 126.1 points and was the highest since the inception of Drewry Container Port Throughput Index in January 2012.
All regions witnessed monthly and annual increases, except Latin America. The China and North America throughput indices reached an all-time high level of 140 and 139 points in May 2018 which was up 8.1% and 3.8%, respectively compared with April However, the annual increase was slightly lower at 2.8% for China and 4.6% for North America.