Decoupling between trade blocs? The implications for ports

Some decoupling of both economies can already be observed, as both countries seem to be keen to reduce their interdependence. This has led to ‘friendshoring’: several studies have found that intra-bloc trade has been growing faster than inter-bloc trade. Further decoupling between China and the US may be expected.

However, the picture in Europe is less clear. Contrary to the US, no decoupling has taken place, at least if measured by the importance of China as a trade partner of the EU. Such decoupling may, however, be on the horizon, partly because of trade conflicts especially regarding electric cars, and partly because of the gradual recognition in Europe of the need for increased strategic autonomy. This emerging picture has led to a lower share of intermediates in global trade, as commodity chains become less trade trade-intensive. Contrary to services trade, goods trade growth has been lagging GDP growth since the economic & financial crisis in 2008/2009.

All of this suggests maritime freight volume growth will be very moderate, if at all. Furthermore, trade growth can be expected to vary between partner countries, with most of the growth arising with partners in the same ‘block’, for Europe probably most importantly Turkey and Morocco. Trade prospects with the US are more uncertain, giving the potential for conflict on a variety of topics, from regulation of tech companies to climate policies and relations with China.

In this changing landscape, it may be worthwhile for ports to perform a kind of ‘stress test’ somewhat similar to the stress test of banks: ‘in the most adverse environment we can imagine, with a breakdown of global trade, do our investments still create sufficient value for users and society’? A positive answer is reason for comfort, a negative answer may lead to a re-think in terms of options to reduce risks, for instance through more phased approaches or including more conditions before approving major decisions.