There is not any evidence yet showing that the shipping sector has been significantly impacted by the escalating U.S.-China trade war, according to the shipping association of one of the world’s most crucial port cities.
“In the container segment there is no clear evidence as yet, of any major impact,” Esben Poulsson, president of the Singapore Shipping Association, told CNBC. “One or two (shipping) lines have reduced their capacity somewhat, but there is no solid evidence of any great impact to date.”
While Poulsson said there has been some reduction in the exports of soybeans from the U.S. to China, as well as cutbacks in iron ore shipments, which have negatively affected sentiment, those have been “relatively minor.”
Impact on the tanker business has been limited as well. At just 7.7 million tonnes last year, U.S. exports of crude oil to China constituted only 17 percent of the total U.S. exports of crude oil globally, according to BP’s statistical review of world energy.
At the same time, trade to enter Asia, remains “robust,” Poulsson said.
President Donald Trump’s administration earlier this week announced a plan to impose tariffs on an additional $200 billion in Chinese goods, the latest move in the ongoing trade spat. The list included items ranging from furniture, electronics, food products, chemicals, tobacco, to iron and steel.
Shipping company Maersk also made a positive assessment of where things now stand, but it warned, however, that continued escalation could result in “severe consequences for global trade.”
“Current tariff measures between U.S. and China remain curtailed in terms of impact on the trans-Pacific trade,” a Maersk spokesperson told CNBC.
U.S. tariffs on steel and aluminium imports from the EU, Canada and Mexico have also had only a limited impact on global container trade, according to the Maersk spokesperson.
Overcapacity and an ‘avalanche’ of regulation
Higher fuel costs and growing regulatory burdens remain bigger concerns in the shipping sector than the ongoing trade war.
Significantly, the International Maritime Organization’s implementation of a sulfur cap on marine fuel of 0.5 percent, down from the current 3.5 percent, will raise global shipping fuel costs dramatically. The move was part of efforts to combat air pollution, and will come into effect in 2020.
Research firm Wood Mackenzie predicted that higher crude prices and limited quantities of marine gas oil (MGO), a lower-sulfur but higher-cost alternative, could eventually cost the industry an additional $60 billion annually as affected ships switch fuels, or install the systems required to remove sulfur from exhaust gas emitted by other oils.
“The trade issue is just another element. There are already many other elements facing the industry — be it overcapacity or be it the avalanche of regulation that we have coming at us. We definitely do not need this escalating trade war to last,” Poulsson said.