News, events and analyses related to global trade and snippets of changing trade matrix during the month of June 2015

Mexico

Auto exports

On top gear

Mexico’s auto industry seems to be going from strength to strength. In fact, the country’s export-oriented car manufacturing boom, which has seen over $23 billion worth of investments/commitments just in the last three years, has local experts calling it the new automotive gold rush! With most of the top global automakers expanding capacity in Mexico to use both its low-cost manufacturing expertise and proximity to and FTA with US, the country’s auto production and exports have reached a new record. According to Mexican Auto Industry Association, in May, auto exports rose to a new high 240,709 units, with exports to Canada and Europe surging by 29.2% and 70.7% respectively. In fact, it’s interesting to note that Mexico’s auto exports are worth 30% more than India’s total exports!

Zimbabwe

Rhino exports

Last throw of the dice

Zimbabwe’s live animal exports, which are lately acting as a life-support for its ailing economy, have got another shot in the arm. The country recently shipped five rhinos to Botswana. Interestingly, the news comes within a month of it deciding to export over 60 baby elephants to raise funds for conservation. Once the five rhinos reach Botswana, they are expected to be relocated to the famous Moremi Game Reserve. The move was initiated as part of conservation efforts amid increased poaching activities in southern Africa. The last exports of the rhinos from Zimbabwe – home to most of the rhinos in the world – had taken place in the early 1990s to Australia.

UK

Gin exports

National spirit in high spirits

As gin lovers across the world celebrated the World Gin Day, British distillers were jubilant as the country’s national spirit gave the British economy a real tonic with exports hitting a record of $607 million in CY2014. It’s worth noting that Britain is the world’s biggest gin exporter, accounting for 70% of the global gin market. A spirit, once seen as the preserve of the old and the posh, has become the sophisticated tipple of choice for cocktail fans. In fact, the English spirit has become such a boon to booze companies that since 2009, more than 35 micro-distilleries have sprung up in the country.

Russia

Fish imports

Something fishy?

Russia has shown a red card to imports of processed & canned fish from Latvia and Estonia, citing health safety concerns. Russian authorities have asked Baltic nations to recall their fish products after they were found to be contaminated with toxic substances. It’s worth noting that fish producers in Latvia export around half of their catch to Russia, but Russia has, on several occasions, questioned the quality of canned fish products from the region. Meanwhile, Latvian authorities have accused Russia of using fish to make a political statement as tensions between the latter and Baltic nations (of Latvia, Estonia and Lithuania) have risen post the Ukrainian crisis. Russia has banned fresh fish imports from Baltic nations last year in retaliation for the imposition of EU sanctions against Moscow.

Pakistan-Sri Lanka

Sliding trade

Free trade is not free lunch

All is not well, it seems, between Sri Lanka and Pakistan as despite signing a FTA, trade between the two nations continues to slide hitting a five-year low of just $341.2 million in CY2014. Expressing concerns over the trend, Rohitha Tilakaratne, President, Sri Lanka-Pakistan Business Council, said, “The trade agreement that was signed between Sri Lanka and Pakistan is not giving the desired results. Instead of going upward, we are looking at a downward trend. I think that is something that both countries will have to focus immediately and resolve.” While trade between the two countries has always been in favour of Pakistan, Sri Lankan businesses blame the former of violating several clauses of the FTA, which they claim are affecting the growth of their exports. It’s worth noting that after India, Pakistan is Sri Lanka’s second largest trading partner in the SAARC region and the two countries had signed a FTA in 2005.

China

E-Commerce

Gearing for another frontier

According to a joint research by Chinese retail giant Alibaba and global consulting firm Accenture, China’s cross-border e-commerce trade is likely to surge 10x in the next five years and reach $245 billion. The study also claims that globally, the cross border e-commerce sector, which is being seen as the new engine of economic growth, will jump to $994 billion by 2020. It’s worth noting that recently, in response to plateauing trade figures, the Chinese government introduced a series of policies to boost domestic consumption and encourage the cross-border e-commerce sector. In fact, China’s Ministry of Commerce claims that with over 5,000 online shopping platforms and more than 2,00,000 companies in business, trade volume through this sector will reach 6.5 trillion yuan (about $1 trillion) in 2016.

USA

Chicken exports

No takers for yankee poultry

Looks like the woes of US poultry producers are far from getting over as Cuba and Russia have joined the list of nations that have banned imports of US chicken, citing fears over an outbreak of bird flu epidemic. It’s worth noting that the US – the world’s largest poultry producer – is currently facing one of the worst outbreaks of avian influenza in the country’s history. The outbreak has not only hit poultry farms in 21 states in the country since December last year, but has also led to import bans in several countries. While over 46 million chickens and turkeys have been killed so far to contain the outbreak, USA Poultry & Egg Export Council claims that bans in several importing nations has cost US poultry producers $600 million, just in the first quarter of CY2015.

G20

Monitoring report

For a freer world

The WTO’s 13th trade monitoring report on G20 trade measures shows a slight deceleration in the application of new trade-restrictive measures by G20 members, with the average number of such measures applied per month at its lowest since 2013. The report also claims that since mid-October 2014, 119 new trade-restrictive measures have been put in place – an average of 17 new measures per month. Also, during this period, G-20 economies have continued to adopt measures aimed at facilitating trade. The trajectory of such trade liberalising measures remains stable with 112 new measures introduced during the period under review — an average of 16 new measures per month. The report also underlines that it is not yet clear if this deceleration will continue and hence, has appealed G20 leaders to show continued vigilance determination to remove trade barriers.

Maersk Line

Mega-ship order

The bigger, the better

World’s largest container shipping company Maersk Line has signed a new building contract with South Korean shipbuilder Daewoo Shipbuilding & Marine Engineering (DSME). The order is for 11, plus 6 optional, second generation Triple-E container vessels. The ultra-large container carriers will have a capacity of 19,630 TEU (twenty-foot equivalent) each and have a length of approximately 400 meters, width of 58.6 meters, and a draft of 16.5 meters. The new vessels will be the largest in Maersk Line’s fleet and are intended for the Asia-Europe service. These vessels will replace smaller, less efficient vessels.

After signing of the $1.8 billion contract in Copenhagen, Søren Toft, Chief Operating Officer (COO), Maersk Line in a release said that the vessels will help the company to stay competitive in the Asia–Europe trade and will be key in our strategy to grow with the market.

This is the second new-building order in Maersk Line’s investment programme, following the seven 3,600 TEU feeder vessels announced earlier this year. Over the coming five years, Maersk Line is planning to invest $15 billion in new-buildings, retrofitting, containers and other equipment. The 11 new vessels will join Maersk Line’s fleet between April 2017 and May 2018. They will sail under Danish flag.

It’s worth noting that due to rising fuel cost, vessel operators around the world are introducing larger carriers which can haul more cargo in each trip and also help in bringing down per container transport cost.