The sky isn't falling in on cargo demand... yet
While the sky “isn’t falling in”, as one speaker put it, there was a definite air of negativity on the global economic outlook at TOC Asia’s conference in Singapore.
Alan Murphy, director for Asia at Sea-Intelligence Maritime Analysis, led the charge for the doubters at the event, stating that he was “relatively pessimistic on demand growth”.
With the first two months of the year off to a bad start, Mr Murphy pointed to an “outright contraction” in demand growth.
Noting this is not a “good thing”, he added: “If you are giving away money every time you move a container you are no longer a company, you are a charity. This is not a long-term survival strategy.”
Mr Murphy’s doubts echo the International Monetary Fund’s (IMF) cut to its outlook for global growth, pitching it at its lowest since the global financial crisis. It now expects the world economy to grow 3.3% this year, down from the 3.5% it forecast for 2019. The IMF puts this down to a weaker outlook for the majority of advanced economies.
The IMF’s chief economist, Gita Gopinath, described this as a “delicate moment” for the global economy and warned that a pickup in growth next year is far from assured.
But other panellists at TOC Asia, while acknowledging a slowdown, were less convinced that things were as bad as Mr Murphy made out.
Amazon executive Jim Lim agreed there was pessimism in the air, but was quick to remind listeners that one quarter does not represent the whole year. A “good balance of supply demand” could well drag the sector back to more palatable levels, he noted.
The Ocean Network Express chief executive moved further along the spectrum, stating that he expects “relatively steady demand growth for years to come”, and while he conceded that the market is facing a slowdown in economic activity, he said that he doesn’t believe it is a slump.
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