Economy and seaports in 2024 and 2025. The role of APEC and ASEAN seaports is growing
By Marek Grzybowski
Seaports live at a pace set by the world’s major economies. The vitality of economies and international trade has a decisive impact on seaports. The efficiency of seaports has a significant impact on the efficiency of international trade. After all, over 80% of goods are moved via sea routes. In 2024, the value of international trade turnover will reach a record level of almost USD 33 trillion – UNCTAD analysts report. Seaports must prepare for the fact that global trade will reach a value of around USD 34 trillion in 2025.
There are more and more goods in ports. In 2024, over 12.35 billion tons of goods were transported by sea, and in 2025 there will be over 2% more. Seaports, both large and small, are undergoing dynamic changes. Ports are going out to sea and terminals are being automated. Robotization is progressing. ICT systems supported by AI and VR solutions, satellite systems and visual observation are being widely used.
The IT security of management and operational systems is at risk. The security of infrastructure is at risk. Terminal management and operations systems are being subjected to cyberattacks. After the attacks on critical infrastructure in the Baltic Sea, will ports be the next target of physical attacks? Growing shadow fleets and ships carrying strategic or dangerous cargo can be attacked both at sea and in port.
A bulk carrier, tanker, container ship or a single container can be a tool for a terrorist attack in a seaport. The value and volume of international trade is growing, and with it the threat to maritime connections and ports. Economically developed countries have less and less control over global transport, because goods and services generated in Asia and developing countries dominate international trade.
Asia, thanks to the strength of its maritime transport sector, is still the region best connected to global logistics networks, in which seaports play a crucial role, according to the latest Review of Maritime Transport published by UNCTAD. Asian economies maintain their leading positions in the Liner Shipping Connectivity Index (LSCI). China is in the lead, followed by the Republic of Korea and Singapore. This is a result of Asian economies increasing their share of world trade and becoming key players in global production and service chains. Deglobalization has failed. The relocation of production closer to final producers, announced by many governments after the Covid-19 pandemic, has not been implemented on a larger or even smaller scale. Disruptions on the main communication routes in the Red Sea and the Panama Canal have also affected seaport activity. However, by September, operators had mastered the situation on the main trade routes, both liner and tramp.
Global trade in storms
– Global supply chain stress remained high until September 2024, mainly in the Middle East, the Mediterranean and Asia, analysts say in the latest World Bank Trade Watch report. They note that freight on liner services has fallen from the peaks reached in July 2024, but remained more than twice as high as a year ago. “The World Bank’s Global Supply Chain Stress Index, which tracks container ship delays, rose to 1.4 million TEU in September 2024, up 72% compared to October 2023.”
This, of course, had a significant impact on the work of seaports and the entire supply chain. The ports’ work was not made easier by the operation of the shadow fleet and ships carrying strategic goods on gray fleet ships. But here too, terminal operators “got a handle on” the situation. More controversial cargoes were transhipped several times or transported semi-legally. The economies of Asia recovered and needed raw materials, while the developed economies needed components for production.
The effect was particularly visible in Asian port terminals. Vietnam recorded a spectacular increase in activity on the maritime logistics market. It recorded the highest long-term increase in LSCI by 199% since 2006. It is no wonder that the Business Mixer organized by the Port of Gdansk Authority in Ho Chi Minh City enjoyed such interest from Vietnamese business. We wrote about it here [https://www.gospodarkamorska.pl/bylismy-na-business-mixerze-portu-gdansk-w-wietnamie-pelna-sala-i-duze-szanse-82062]
– In the third quarter of 2024, developed economies led the growth in global trade, supported by stable demand and improving business conditions. Imports for this group increased by 3% in this quarter, while exports increased by 2% – emphasize the authors of the UNCTAD Report.
Japan recorded the strongest quarterly growth in goods exports (5%) and the highest annual growth in services exports (13%). The United States recorded a 4% increase in goods imports both quarterly and annually, with exports increasing by 2% year-on-year and 1% in Q3 2024. The European Union maintained growth in trade in services, with both imports and exports maintaining positive values throughout the year. This pace of growth had to be transferred to the work of transshipment terminals and increased demand for maritime transport.
These are good results, considering that the beginning of the year did not herald much economic activity. But the second quarter has already revived maritime trade. – Increased production and rising fuel prices have increased the volume of trade in goods – emphasize analysts from the World Bank, and as evidence they mention that “Trade in machinery increased by 9.9% from April to July 2024 compared to the same period in 2023. Trade in chemicals increased by 6% year-on-year; electronics by 4.5%; and food, wood and paper products by 5.8%. ” Decreases in the supply of goods in the first quarter of 2024 were quickly compensated.
While the economies of Asia, the EU and North America recovered, “developing regions struggled with declines during the same period. UNCTAD said that “Trade among developing countries, known as South-South trade, fell by 1% in the quarter, reversing earlier trends. However, developing-country trade remained positive year-on-year, growing by about 3%.
Fuel terminals also had their moment in 2024. “Fuel trade rose by 0.8% from April to July after a 14% drop in the first quarter. Iron and steel products grew by 1.4% year-on-year after a 5.4% drop in the first quarter of 2024,” the World Bank said.
Transport trade, on the other hand, fell to 0.6% from April to July 2024, and coal trade fell by 2.7% compared to 2023. Trade in agricultural goods and textiles continued to be sluggish in the first half of the year, with a noticeable slowdown at ports.
Asia slowed down for a moment, then sped up
In the second half of the year, Asian economies accelerated, which was immediately noticed in ports and on sea routes. China recorded a 1% decline in goods imports in the third quarter of last year, and a 2% decline in goods exports, while imports of services fell by 1% in the quarter. However, exports of services (including maritime transport, logistics and ports) continued to grow, increasing by 9% quarterly and 9% annually. Imports of services (including logistics) increased significantly by 17% during the year. In 2024, India recorded a 1% decline in goods imports and 3% in goods exports in the third quarter, but imports and exports of services increased by 1%. Over the year, imports of goods increased by 4% and exports by 2% – reports UNCTAD.
Trade in East Asia came to a halt, with no increase in imports and only a 1% increase in exports during the quarter. Supply was driven by trade in ICT products and clothing, while the automotive sector recorded a decline. Thus, trade in ICT products and technologies and clothing boosted trade turnover in the third quarter of 2024. Trade in communication equipment increased by 13%, despite the fact that the annual growth in the sector’s production reached only 1% increase. Imports and exports of office equipment increased by 13% in the third quarter of this year and as a result generated a 15% increase in the supply of this sector during the year. Despite the increase in trade in clothing in the third quarter by 14%, a 5% decrease was recorded for the whole year.
The recovery in seaports was influenced by the recovery of the Chinese economy caused by the active policy of the government to direct state bank loans to production. These actions and the demand of the global market led to an increase in Chinese exports. The scale effect means that export volumes are growing, but export revenues have a low growth rate due to falling prices.
Maritime logistics is also losing out, as exporters are willing to pay less for transshipment services and sea transport. This phenomenon is highlighted by analysts from the Dutch CPB (CPB Netherlands Bureau for Economic Policy Analysis) and emphasize that the pace of Chinese exports is ahead of the pace of exports from the EU and the United States. According to data on the export volume published by the General Administration of Customs of the People’s Republic of China (GACC), Chinese exports have increased by over 12% in volume, while world trade has only increased by around 3%. This has also caused an imbalance in the demand for cargo space on ships and congestion in transshipment terminals in Chinese ports. The waiting time for entering the port has increased, ships were late with cargo, and delays in loading were recorded. However, the waiting time for entering the ports of developing countries was longer than in the ports of developed countries. Thanks to automation, good organization of cargo clearance and digitalization, the time spent by many ships in terminals has been shortened.
Data collected by CPB shows that “the growth of Chinese import volumes has collapsed and Chinese imports in volume terms are currently shrinking.” It is estimated that in 2014, “export volumes increased by 13%, while Chinese import volumes increased by only 2%.”
Asian ports busier in 2024
With exports accounting for about 20 percent of GDP, the 10-point gap means that net exports contribute close to 2 percent of GDP to China’s economic growth. The latest data showed that Chinese ports were busier, with China’s foreign trade rising 5.2 percent year-on-year to 36.02 trillion yuan ($5.02 trillion) in January-October 2024. Statistics from the General Administration of Customs showed that China’s exports of electromechanical products rose 8.5 percent year-on-year to 12.36 trillion yuan between January and October, accounting for 59.4 percent of total exports. That means more containers are being supplied to ports along the sea lanes. This trend is expected to continue in China in 2025.
The Vietnamese National Assembly recently announced that total merchandise exports in 2024 are expected to reach $382.7 billion, up 7.9% year-on-year. Imports of merchandise are expected to reach $366.9 billion, up 12.4% year-on-year. Vietnam is set to secure a trade surplus of $15.8 billion this year. The Vietnamese government is setting an even more ambitious target for 2025. Exports are expected to reach $405 billion, up 6%, while imports are expected to total $389 billion, up 6%.
India’s Commerce Secretary reported in June 2024 that India’s exports of goods and services rose 5.4% year-on-year to $65.47 billion in June. This is due to the increase in orders, which could increase total exports to $800 billion in the current fiscal year ending in March 2025, Reuters reported.
India’s exports of goods and services rose to $778.2 billion in fiscal 2024, and the government expects total exports to reach $1 trillion by 2030. To support such a high increase in trade, the Indian government has undertaken a massive investment program in seaports and the development of rail links with Russia. We wrote about it here [https://www.gospodarkamorska.pl/kolej-wspiera-porty-polaczenie-kolejowe-rasht-morze-kaspijskie-umozliwia-transport-towarow-z-rosji-do-iraku-i-indii-78939]
The Republic of Korea’s exports increased in 2024 by 8.2% compared to the previous year to a record USD 683.8 billion in 2024 – reported the Ministry of Trade, Industry and Energy. Despite good results, the government’s export target of USD 700 billion was not achieved. Korea, the fourth largest economy in Asia, also failed to overtake its closest neighbor, Japan, which is also experiencing economic turmoil.
Korea’s imports fell 1.6% year-on-year to $632 billion, resulting in a trade surplus of $51.8 billion, the largest since 2018. However, 2025 will be a weaker year for South Korea, and the government is revising its growth and export data. That means there will be less traffic at the country’s ports, both in terms of exports and imports.
The situation in seaports may change dramatically in 2025, taking into account the announcements of President Donald Trump. Radical changes in US trade policy, including high tariffs, may disrupt global trade chains and affect key logistics operators. If the announced tariffs and non-tariff restrictions are introduced, we may be dealing with the same revolution in ports that we saw after Russia’s attack on Ukraine.
The actions announced by Trump threaten to provoke retaliation and a domino effect can be expected. Suppliers and recipients of components for production and consumer goods have been creating new channels of maritime trade for several years now. The Chinese are building new ports or entering into alliances with terminal operators that are key to maintaining sales markets. The role of third countries that will not be subject to restrictions imposed by the US will increase. The role of seaports operating in the APEC and ASEAN zones will certainly increase.