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As geopolitical upheaval continues, Peter Sand, Chief Analyst, Xeneta, explores how global trade patterns have (and will) evolve.<\/em><\/strong><\/p>\n Geopolitical unrest\u00a0<\/strong>could have dramatic and long-term impacts on global trade patterns for all goods and commodities, as political alliances are essentially being ripped up and rewritten. Spurred by Russia\u2019s invasion of Ukraine<\/strong> in 2022, changing trade patterns are emerging in the container shipping\u00a0<\/strong>sector, said Xeneta\u2019s Peter Sand, as the term of the day is \u201cfriendshoring\u201d, as countries decouple from dependence\u00a0on<\/strong> China<\/strong>, moving trade to countries with which they are more closely aligned.<\/p>\n This trend has in fact been evolving for several years now.<\/p>\n \u201cLet me give you some numbers to put it into perspective,\u201d said Sand. \u201cIn 2017, two-thirds of American imports from Asia originated from China. Today that’s down to 56%. The winner in this game is Vietnam<\/strong>; Vietnam used to take up 6% of U.S.-Asian imports and it’s now up to 11%.\u201d<\/p>\n Shifting trade patterns are more complex than simply rerouting ships, as significant investment is needed in ports, terminal and warehouses\u2014essentially every element of the supply chain.<\/p>\n Looking deeper into the U.S. market, Sand said the westbound transatlantic trade lanes<\/strong>, which are still \u201cone of the main trades that defies gravity,\u201d are starting to slow too.<\/p>\n \u201cIt hasn’t been hit to the same extent as all the others, right now we still see elevated levels on the westbound trade of transatlantic,\u201d said Sand. \u201cBut the one thing that is changing right now, at least the pace of the decline, is [increased] capacity carriers seem to deploy; according to Sea-Intelligence, 25% more as compared to mid-March last year.\u201d<\/p>\n Declining demand and increased carrying capacity does not bode well for the vessel owner operators, with falling freight rates on this trade the norm today.<\/p>\n On the other side of the country, the U.S. West Coast\u00a0<\/strong>has been, and remains, an industry bellwether. But it has been beset by labor disputes that \u201cstill haunts the market and gives shippers and carriers sleepless nights,\u201d said Sand.<\/p>\n Despite the problems, rates are on the rise.<\/p>\n \u201cWhat we have seen most recently has been a successful initiative by the carriers,\u201d said Sand. \u201cWe’ve seen them significantly push up China to U.S. West Coast rates from $1,200 to $1,700 per TEU. We have also seen the long-term rates inch up gradually,\u201d indicating that perhaps the market has bottomed out at the loss-making level for the carriers.<\/p>\n