China’s manufacturing shift to boost airfreight demand at expense of maritime

The latest analysis from DHL says that a shift from manufacturing to services and consumption underway in China bodes well for airfreight, at the expense of seafreight. With medium-term demand for air freight expected to stay strong, DHL is now advising businesses to secure sufficient airfreight capacity in case there is a shortage.

“With China’s economy shifting towards a more consumption- and service-driven model, it’s no surprise that the growth outlook for ocean freight is significantly lower than before,” said Kelvin Leung, CEO of DHL Global Forwarding’s Asia-Pacific region.

China’s transition towards a service-based economy has been underway for some time, pushing low-value-added manufacturing to other countries in Southeast Asia, but DHL’s data suggest that the country’s core industries, such as automotive and industrial manufacturing, are still holding on.

The Bonn, Germany-based integrator’s “Global Trade Barometer” report, which debuted earlier this month, suggested that Chinese exports –  particularly those of consumer goods, machinery parts, and chemicals and products – will bolster the country’s near-term growth, maintaining demand for air freight volumes out of China. However, as China pivots away from lower-end manufacturing, demand for ocean-mode trade is expected to lose momentum, largely due to the country’s “reduced appetite for industrial raw materials.”

According to the barometer report, the decline in seafreight has been offset by resilient exports in household goods, as well as automotive and machinery parts. The country’s growth indices for household goods and chemical products also remain strong, but DHL warned that a decline in consumer fashion products is expected to continue weighing down Chinese air exports in the next three months.

“Despite the slowdown in infrastructure spending, China’s consumer and industrial exports remain strong, signaling the success of the country’s greater focus on economic development over raw growth,” Leung said. “Businesses can expect to see growing opportunities to source high-quality manufacturing and materials from China, and they should take steps to secure sufficient air freight capacity.”

On a global scale, DHL’s “Global Trade Barometer” predicted continued growth in global trade over the next three months, despite slight losses in momentum.