China's latest report on economic growth fell short of expectations, but for those who monitor traffic on the global water highways, the news was not a surprise.
In fact, freight and shipping data over the last several months have been pointing to such a slowdown.
A previous economic slowdown in China started showing up in the shipping data six months before other people noticed, said Gerry Wang, the co-founder and former CEO of Seaspan (SSW), the world's largest container shipowner. In a 2012 interview, he said his business had a unique window on global economic activity. "We are involved in everything from commodity trades, manufacturing and consumption," he said then. "Our volume is200 times more than parcel carriers FedEx, DHL or UPS. Ninety-nine percent of all the goods you see at Walmart are shipped via container ship."
The Trump administration's tariffs on $34 billion in Chinese goods went into effect in July. For weeks before that, there was a huge push to import products ahead of the tariffs. Container trade between China and the U.S. from April through June grew 10 percent year over year based on Accenture's analysis of the Department of Commerce import and export data.
According to the Seabury Global Ocean Trade Database, import volumes dropped significantly after additional tariffs were imposed. U.S. imports of Chinese steel and aluminum dropped 53 percent after tariffs on those products went into effect in March compared to March 2017, and imports on the $34 billion of Chinese goods dropped 21 percent since the July tariffs went into effect compared to the prior year.
Experts say the goods on the tariff list are going elsewhere.
"You have already seen a shift in moving Chinese cargo away from the U.S. to other countries," said Michel Looten, Director, Maritime, Seabury Consulting. "Those goods went on to Japan, South Korea, Taiwan, Germany, and Italy."
Experts say the effects of the $200 billion tariffs that went live in September will help forecasters on their 2019 outlooks. "We will have some insight into the impact in a couple of weeks when that trade data is released," Seabury Group's Michel Looten told CNBC. "But that's the tip of the iceberg. The real effect hits in 2019 when the 25 percent tariff is enforced."
The trade data on the $16 billion tariff that went into effect will be out in November and September's $200 billion will be out in December.
Reference: CNBC
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