Cargo volumes in worldwide decline as trade uncertainty envelops all
Freight volumes around the world are falling, signalling tougher times amid escalating trade tensions and heightened uncertainty, according to a Reuters commentary.
Freight volumes in the United States were up by just 0.8 per cent in the three months from March to May compared with the same period a year earlier, according to the Bureau of Transportation Statistics.Volumes fell year on year in May, for the first time in more than two and half years, according to the agency's transportation services index.
Freight is growing at the slowest rate since the mid-cycle slowdown of 2015/16, based on the index, which covers movements by truck, rail, barge, pipeline and air cargo.
Truck volumes were still up 3.4 per cent year on year in March-May, but growth was less than half the rate at the same time last year.
Containerised rail traffic actually fell 3.8 per cent in March-May after increasing by 6.9 per cent in the same period the year before.
The slowdown within the United States is part of a broader global downturn in freight which has spread across Europe and Asia.
At Hong Kong's International Airport, the busiest air cargo hub in the world, reported volumes shrank by eight per cent in the second quarter compared with 2018.
London Heathrow's cargo was down six per cent in the second quarter, the worst performance since the recession in 2009.
California's Port of Long Beach, one of the major entry points for transpacific cargo, reported container volumes down almost 11 per cent year on year in April-June.
Los Angeles, the other major cargo entry point on the US west coast, continued to eke out growth, but container trade was up by just one per cent.
Globally, trade volumes were up by just 0.4 per cent in the three months from February to April, according to the Netherlands Bureau of Economic Policy Analysis.
More recent data for individual ports and airports suggests growth will slow further and turn negative in May and June. Most historical proxies for trade suggest volumes will stay flat or fall in the second half of the year.
The slackening global economy is now rebounding on the United States through a combination of weak export growth, heightened competition from cheap imports, and a strong dollar.
"Economic momentum appears to have slowed in some major foreign economies, and that weakness could affect the US economy," US Federal Reserve chairman Jerome Powell said in his testimony to Congress this week.
For now, it remains unclear whether the current deceleration in trade and manufacturing growth is a mid-cycle slowdown like 1997/98 and 2015/16 or marks the end of the current business cycle.