BRIC Supply Chains Fairly Flush, Say Maritime Analysts

Although Brazil, Russia, India and China are suffering from overheated economies, the BRIC region is still generating attractive cargo growth, said Drewry Maritime Research analysts.

Container traffic loaded and discharged in the BRIC region’s ports in the first half of the year grew by an impressive 7.1% year-on-year, up to 90.7 million twenty-foot equivalent units (TEUs), which is significantly better than North America’s 1.2% and Europe’s 0%).

“As Brazil’s, Russia’s, India’s and China’s maritime gateways handle little transhipment traffic, the change is a good barometer of what the downturn in their economies since the beginning of last year has meant to ocean carriers in terms of cargo carried in and out,” said Neil Dekker, head of Drewry container research.

Although their economies slowed significantly, the message is that the BRIC region is still “very much alive and kicking,” added Dekker,  with more than enough cargo around to keep ocean carriers happy were it not for the excess newbuild tonnage delivered in their chase for greater economies of scale.”

“The problem is that China’s port traffic in hard numbers still dwarfs the rest of the region, and it is the most vulnerable due to a wide range of macro-economic concerns and rising labor costs,” he said. “Were its economy to fail, it would drag the other emerging economies down with it.”
India is now the weakest link in the chain. With a population of 1.24 billion, just under China’s 1.35 billion, the comparatively poor showing of its port’s container traffic speaks mountains on its difficult trading conditions. Whereas China has focussed on manufacturing, India has concentrated more on service industries which generates little cargo.

“This is perhaps just as well, as its port and inland transport infrastructure is already hopelessly congested, to the point where several days delay at every turning point is considered normal,” said Dekker.

Red tape additionally appears to exist everywhere, recently prompting U.S. trade officials to reinforce their complaint over unfair trading practices. There are growing calls for economic reform within India, however, some of which have recently been heard by its Government, observed Drewry.

SC
MR