The perennial intra-Asian trade puzzle

Volume figures put forward by analysts widely vary, not least because of the confusion between containers moved as feeder traffic and movements which are the result of direct trade between Asian states.

One chief executive of a leading intra-Asia and feeder container fleet operator tells Port Strategy that even those moving the boxes are unsure how large the respective markets are and how fast they are growing. “No one knows how big the feeder market within Asia is,” he admits on the condition of anonymity. “But it is likely even bigger than the 16m teu intra-Asia market, which is our best estimate of total market numbers in 2010.”

A spokesman for Hutchison Port Holdings says trade growth both within South East Asia and between the region and other Asian states has been boosted by reductions in tariffs, rapid domestic economic growth and a boom in manufacturing industry located in South East Asia.

Certainly, Free Trade Agreements (FTA) and bilateral arrangements are removing barriers to trade – one major shipping line estimates that the value of trade between China and Asean countries increased in value by some 40% last year, not least because of a new FTA that entered force at the start of 2010.

Asia’s growing middle classes are also now rampant consumers of the type of retail products that were previously just exported from Asia to the West, while manufacturers are also diversifying production around Asia both to spread risk and in search of lower labour costs than now available on China’s coast.

Kelvin Leung, North Asia Pacific chief executive for DHL Global Forwarding, says that as supply chains mature, semi-manufactured products are increasingly moved between factories within Asia. He describes a ‘triangulation’ process within companies that often sees decision-makers based in one location, production at different stages conducted in different Asian countries and the final product then shipped to multiple markets, both within Asia and abroad, often after transhipping via regional hubs.

This supply chain trend, he suggests, will intensify giving intra-Asia volumes an additional boost as the decade progresses.

Truong Bui, a senior consultant at Drewry’s Singapore office, is adamant that recent growth in intra-Asia traffic will continue. “It will definitely grow in the future as Asean countries cooperate more with China and India’s emergence will provide a further push,” he insists.