Asian sea trade and shipbuilding industry on the wave

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By Marek Grzybowski

Freight decreased from USD 3,483 per FEU in October 2022 to USD 1,404 per FEU at the end of September 2023, according to Drewry’s World Container Index (DWCI) in September this year .

The Drewry WCI Index decreased by 5.1% during the week at the end of September to $1,404.38, which means a decrease of 65% compared to the same week last year, Drewry reports. The latest Drewry WCI index of $1,404.38 per 40-foot container is currently 1% lower than the 2019 (pre-pandemic) average rate of $1,420.

The average composite index for the current year is $1,747 per FEU container, which is $932 less than the 10-year average rate of $2,678, Drewry experts explain.

At the beginning of 2023, 18 of the top 35 shipowners were in Asia. China is the second largest ship-owning country. The first position is taken by shipowners from Greece. They are followed by Japan (third fleet), Singapore (fourth fleet), Hong Kong (fifth fleet) and shipowners from the Republic of Korea (sixth fleet).
Asian fleets are growing

China shipowners  have an 11.04%

In terms of value, China shipowners  have an 11.04% share of the world’s fleet, which puts it second only to Greece with 11.8%. Japanese shipowners hold 10.73% of the world fleet.

Hong Kong, which is currently a province of China, is the fourth largest flag state in the world in terms of deadweight. The Hong Kong-flagged fleet has a capacity of 200.07 million deadweight tons. This is an 8.8% share in the world fleet.

In terms of number of ships, Hong Kong has a 2.4% share of the world’s fleet. There are 2,537 units registered here. In value terms, Hong Kong-flagged ships account for a 6.27% share of the global fleet. This puts this flag in sixth place in terms of ship value.

Singapore ranks fifth among the leading maritime countries. In terms of flag registry, it is followed by China in sixth place and Japan in tenth place. Among other countries, Indonesia ranks 12th, the Republic of Korea ranks 18th. The Indian Navy ranks the country 19th, Vietnam 22nd, Malaysia 25th.

Ships controlled by owners in China, Japan and Greece account for the largest share of CO2 emissions. The Chinese flag flies on an increasing number of ships, and the growth rate of registered ships was 5.4% in 2022.

Asian shipyards dominate
There are three leading shipbuilding countries in Asia. The shipbuilding industries of China, the Republic of Korea and Japan have dominated the world for years. These countries’ shipyards produce 93% of the tonnage (in 2022), with China having a 47% share in the global shipbuilding portfolio.
“Over the last decade, trends in supply chain reconfiguration have been observed around the world, and the latest statistics show that changes in maritime trade logistics are visible in China and several other Asian countries,” UNCTAD experts note.
The volume transported on intra-regional routes in Asia accounted for 27.6% of the share of world trade in 2022. This is largely due to the dynamics of intra-Asia trade. The effect of decooperating production between Asian countries can be seen in the dynamic growth of short sea shipping in the Asian part of the globe and the development of container transport. The expansion of the production system and supply chain in East Asian countries resulted in an increase in container turnover.

“China Plus One” – powers ports in Asia
“As a result, intra-Asian services serving the regional supply chain recorded the highest growth rates in 2021-2022 – reflecting global production arrangements in which China plays the role of a global production center, supported by neighboring East Asian countries supplying parts and components,” UNCTAD analysts emphasize.
Avoiding cooperation with China has led global brands to move production to other countries. However, they did not move from Asia. The strategy adopted by some companies to diversify supply sources and reduce excessive dependence on China has been called the “China Plus One” strategy.
“It involves companies moving production outside China but remaining in Asia,” explain Agnieszka Maciejewska, Associate Director, Models & Scenarios, Global Intelligence & Analytics and Anton Alifandi, Associate Director, Country Risk, S&P Global Market Intelligence.
Closer economic ties between ASEAN countries and mainland China and the United States are encouraging the relocation of production to six ASEAN countries: Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. The 10 ASEAN member states are becoming increasingly economically integrated with mainland China.

USA – course towards ASEAN
Six ASEAN countries are also part of an emerging U.S.-led partnership that aims to balance mainland China’s economic influence in the Indo-Pacific region. The United States follows the lead of mainland China in trade relations with the six ASEAN countries, explain Agnieszka Maciejewska and Anton Alifandi.
For example, Apple, Samsung, Sony and Adidas have moved some of their manufacturing operations from China to Southeast Asia due to labor costs and risk management considerations.
“The share of containerized product imports into the United States from Vietnam increased from 4% in 2017 to 8% in 2022, while India’s share increased from 3% to 5%. China’s share dropped from 40% in 2017 to 31% in 2022, say the authors of the “Review of Maritime Transport 2023”.
Leaving production in Asian countries means that the transpacific route is still active in 2022. Despite attempts to transfer the production of components and finished products, trade between East Asia (mainly China) and the United States still dominates global trade flows.
This relationship is reflected in the supply of containers. The economic slowdown caused overall containerized cargo volume to U.S. ports to decline by 6.5%, from 30 million TEUs in 2021 to 28 million TEUs in 2022. Containerized cargo volumes on the Asia-Europe route fell by 4.9 %.
Major changes have occurred in the transportation of bulk cargo, oil and gas and products. This is the result of the war in Ukraine and the sanctions imposed on Russia. Asian countries increased imports from Russia. Asia, led by China, maintains its role as an important player on the world economic map. The effects of this can be seen in ports and on shipping routes.