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Home » Global trade expansion to slow in first quarter of 2018, DHL forecasts
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Global trade expansion to slow in first quarter of 2018, DHL forecasts

January 18, 2018
Ben Ames
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The volume of containerized international trade will expand for the next three months, although the growth rate may level off due to moderate slowdowns in China and Japan, according to a new forecast released today by German transport and logistics giant Deutsche Post DHL Group.

The first-ever "Global Trade Barometer," produced for DHL by consultancy Accenture, reported a combined global index value of 64 for January, down slightly from the December 2017 value of 66 but well above the threshold value of 50, which indicates traffic growth. Numbers below 50 would forecast a decline in world trade.

The study predicted a similar trend for U.S. trade flows, which it forecast to expand in January with an index value of 64, the same as December 2017 but down slightly from a level 66 in November 2017. The report combines import and export customs data from 70 countries to predict trends in air and ocean trade for seven industrialized nations, one of them being the U.S. The report forecasts broad trends of expansion or contraction on certain trade lanes. It does not forecast specific targets for the number of containers expected to ship.

"We are doing this because it gives us new insights into the market so we can provide better transparency and predictability for our customers in a world which is often a bit volatile," Tim Scharwath, CEO of DHL Global Forwarding, Freight, said at a press briefing today in New York. DHL plans to release the index four times per year.

Predicting changes in freight volume could allow both DHL and its customers to adjust to economic trends earlier than was previously possible, then save money by adjusting before their competitors can act, he said. DHL recently took advantage of that capability while testing a developmental version of the index.

"Seeing a predicted rise in air freight in China gave us the opportunity to buy capacity earlier, instead of waiting until later when we would have had to pay a premium for it," Scharwath said.

The index is produced for DHL by the consulting firm Accenture, which calculated the predictions by tracking the flow of consumer-product components known as "early-cycle commodities," such as shirt labels, smartphone screens, or car bumpers, Scott Davidson, a managing director with Accenture's Seabury Consulting division, said at the press conference.

Analysts collected data on more than 2,000 commodities, then applied artificial intelligence and statistical regression to predict cross-border trade between the U.S., South Korea, Japan, China, Germany, U.K., and India, Davidson said.

Another way DHL customers could use the index is by feeding the predictive data into their own business analysis tools to help them produce more accurate forecasts and obtain the best terms on shipping rates, Scharwath said.

"Some companies have high-tech tools that help them determine how many of their products will be bought in each country, but they tend to forget that those products need to be transported there also," he said.

"When companies make last-minute changes to meet a change in demand, that can cause problems. If the documentation doesn't match what you get on the dock, then the entire supply chain stops because you don't have what you need on the shop floor," said Scharwath.

Business Management & Finance
KEYWORDS Accenture DHL
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Benames
Ben Ames has spent 20 years as a journalist since starting out as a daily newspaper reporter in Pennsylvania in 1995. From 1999 forward, he has focused on business and technology reporting for a number of trade journals, beginning when he joined Design News and Modern Materials Handling magazines. Ames is author of the trail guide "Hiking Massachusetts" and is a graduate of the Columbia School of Journalism.

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