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Key Themes in the Shifting Supply Chains and Trade Flows

Following the publication of one of Lloyd's List’s flagship pieces of annual content Top 100 Ports, APAC Editor, Cichen Sen made some interesting discoveries about shipping traffic between global container ports in 2021-2022 and how this illustrates some significant shifts in global supply chains and trade flows

Changes in Port Calls:

  • The number of direct calls from China to the US decreased by 17% in 2022 compared to 2021, reflecting shifts in transpacific trade volumes and supply chain reconfiguration.

  • China's successful zero-Covid strategy in 2021 led to the return of overseas orders to its factories, but the emergence of the Omicron variant in 2022 reversed this trend.

   "China Plus One" Strategy:

  • As companies reconsidered reliance solely on China as the world's factory, they adopted a "China plus one" strategy, resulting in a 23% increase in direct port calls from China to Vietnam in 2022.

  • Vietnam's growing exports to the West and increasing purchasing power contributed to its attractiveness as an alternative manufacturing destination. Mexico's Benefit from China-US Rivalry:

  • Mexico experienced a 14% increase in direct port calls from China in 2022 due to its role as a crucial path for "Made in China" products to bypass tariffs and enter the US market.

  • China's foreign direct investment in Mexico has grown significantly, focused on industries exporting to the US. Russia as a Positive Development for Chinese Manufacturers:

  • China's exports to Russia in 2022 increased by 12.8% compared to 2021, and the number of direct port calls from China to Russia surged by 88%.

  • Russia's Far East ports, such as Vladivostok, gained access to China's domestic transshipment trade, boosting trade volumes between the two countries.

China's Resilience as a Manufacturing Hub:

  • Despite some shifts in supply chains, China is expected to remain a key manufacturing hub due to its solid supply network and capabilities.

  • Certain industries, like the semiconductor sector, may face challenges due to geopolitical restrictions, while others, such as lithium-ion batteries and new energy vehicles, will likely continue to thrive. Investor Caution and Opportunities:

  • Geopolitical risks have made foreign investors cautious about investing in China, leading to reduced foreign interest in Chinese ports.

  • Emerging markets in Southeast Asia, Latin America, and Africa present attractive investment opportunities, with Vietnam standing out as a key player in the "reglobalization" process.

  • Investment opportunities are arising in ports and logistics in these regions, attracting interest from companies like MSC Mediterranean Shipping Company and PSA International. Derisking Rather than Decoupling:

  • The world economy's reconfiguration requires a derisking approach, as a full-scale decoupling from China is not feasible.

  • Businesses are adopting a "segmented or clustered relocation" strategy, relocating certain operations or industries based on various factors.

In conclusion, the shifting supply chains and trade flows are driven by a combination of short-term disruptions and long-term strategic considerations. While China remains a crucial manufacturing hub, other regions are gaining significance, leading to new investment opportunities in diverse markets. The key to navigating this landscape is adopting a cautious but strategic approach to derisk supply chains and explore emerging markets.

Posted on August 3, 2023.


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