The Changing Global Economy Impacts on Seaports and Trade Dr. Walter Kemmsies

Transcription

1 The Changing Global Economy Impacts on Seaports and Trade Dr. Walter Kemmsies Chief Economist, PAGI Group, JLL (Port, Airport & Global Infrastructure)

2 Agenda Where are we in the cycle? What are the barriers to growth? What comes next?

3 Mar-94 Feb-95 Jan-96 Dec-96 Nov-97 Oct-98 Sep-99 Aug-00 Jul-01 Jun-02 May-03 Apr-04 Mar-05 Feb-06 Jan-07 Dec-07 Nov-08 Oct-09 Sep-10 Aug-11 Jul-12 Jun-13 May-14 Apr-15 Mar-16 Feb-17 Jan-18 Dec Best global economic environment in 20 years ANNUAL REAL GDP GROWTH (E) COMMODITY PRICES (INDEXED TO 100 IN 2008) 16% % % 10% India 200 8% 6% 4% 2% China US Brazil Mexico Eurozone Copper Raw Materials Agricultural Oil Steel 0% Japan 50-2% -4% 0-6% Source: Oxford, JLL 3

4 Where are we in the business cycle? Recovery, mid-cycle, recession? was a 21 st Century Great Depression Financial system has recovered Europe had a triple dip recession Public sector financial crisis has been stabilized Inflation and growth risks are balanced Central bankers everywhere not under pressure to increase interest rates 4

5 Differentials in ages is equivalent to differentials in growth PROPORTION OF POPULATION OVER 55 YEARS OF AGE 60% 50% 40% 30% 20% 10% Typical maturing developed economies Highest growth potential economies Japan Europe China Canada US Brazil Mexico India 0% Source: Census Bureau, Kemmsies

6 What are the barriers to growth? Tight labor markets High capacity utilization Worsening congestion Need infrastructure and plant, property and equipment investment to grow Otherwise inflation could accelerate and induce central bankers to be aggressive 6

7 $ Billions Share of Total Congestion is getting worse and ecommerce is growing 2020 congestion forecasts, with trucks ecommerce vs. total retail sales 1,400 10% 1,200 9% 8% 1,000 7% % 5% 4% 400 3% 200 2% 1% 0 0% Ecommerce Share (right axis) E-commerce Total Source: US DOT, Census Bureau, JLL

8 Inventory-to-Sales Ratio Why is the inventory-to-sales ratio rising? Inventory-to-sales ratio: Some theories: Lower interest rates means capital tied up in inventories is less expensive Ecommerce/omnichannel means retailers hold more inventory in more places Worsening congestion and truck driver shortage requires greater safety stocks

9 Inland hubs are becoming more numerous Source: JLL Research

10 What comes next? New US trade terms ball is in trading partner s court Growth-oriented infrastructure policies 10

11 Volume Index Trade growth trends underlie global economic growth World real GDP and trade volume indexes E China CAGR Relative to GDP Growth GDP 3.7% 1.0 Manufactured Goods 7.0% 1.9 Fuels and Mining Products 3.8% 1.0 Agricultural Goods 3.5% 1.0 Total Trade 5.8% Korea, Taiwan Trade growth drivers 40 Demographics Trade Agreements Japan, Brazil Trade Growth 10 Technology Infrastructure 0 GDP Total Agriculture Fuels & Mining Manufactured Resource Constraints Source: WTO, JLL

12 International labor cost comparisons then and now Local manufacturing wages converted into us$ at prevailing exchange rates in 2001 and 2016 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 Source: Government statistics agencies, Trading Economics. JLL

13 Billions The largest global middle class ever! World population and OECD global middle class projections Global Middle Class World Population Source: OECD, US Census Bureau

14 Trillions Million Metric Tons The trade deficit value gap Goods trade deficit measured in us dollars: e Goods trade deficit measured in metric tons: e $1.25 1,200 $1.00 1, $ $ $ $0.00 Source: US Census Bureau 0 Source: US Census Bureau Balance of Trade Value Import Value Export Value Balance of Trade Volume Import Volume Export Volume

15 Summary: trade, congestion and infrastructure Rumors of the death of globalization are premature (More people, more consumption, more trade) (Ecommerce, 3D Printing, Automation is a reaction to congestion) Freight movement is suffering from congestion (Not enough roadway capacity) (Worsening truck driver shortage) The 3 T s of Trump are creating opportunities to tap into global middle class growth (Trade agreements (NAFTA), Tax reform, Transportation infrastructure) (But the infrastructure market place is not waiting for Washington)

16 PAGI thanks you for your time For more information contact one of our team members: Mark Levy Walter Kemmsies Keith Stauber Jonathan Walk Steve Ostrowski Michael Morehead