Demand for shipping routes within Asia is rising as producers diversify supply chains, says an article published on quart website.
Shipping Industry Challenges
The global shipping industry faces substantial challenges, with collapsing container rates, a projected freight recession into 2024, and major players like Maersk planning significant job cuts due to falling profits and overcapacity. However, amid this gloom, intra-Asia shipping emerges as a bright spot.
Intra-Asia Shipping On The Rise
Manufacturers diversifying their supply chains and relocating production segments out of China have led to increased demand for transporting raw materials and intermediate products within Asia.
This shift prompts container ship operators to enhance their Asia services, unveiling new shipping lines connecting Asian ports.
Key Players Respond To The Trend
Major shipping companies, including MSC, Ocean Network Express, Pacific International Lines, HMM, and OOCL, have upgraded and expanded their Asian routes to facilitate more direct connections between China and ports across Southeast Asia.
Vietnam’s Role In Reshaping Trade Flows
Vietnam has emerged as a critical node in the reshaping of global trade flows. Surging foreign investment in Vietnam has led shipping companies to establish more direct connections between Vietnam and the US, as well as within Asia.
Data reflects a significant increase in direct shipping routes and scheduled deployed capacity between the US and Vietnam.
Vietnam’s Maritime Industry Growth
Vietnam’s maritime transport industry witnesses remarkable growth, with an 83% increase in scheduled deployed capacity between the US and Vietnam from 2019 to 2023. The country adds nearly 90 direct routes to fellow Asian nations, emphasizing increased connectivity with South Korea, Malaysia, and Thailand.
Supply Chain Dynamics, Beyond China
While China remains central to global industry and trade routes, the trend of diversification beyond China is evident. Governments and companies seek to reduce risk by expanding manufacturing activities to other Asian countries.
Supply chains are becoming longer, reflecting a shift in the perception of Asia as the new manufacturing hub.
Infrastructure Investment For Sustainable Growth
To fully capitalize on the increased demand for intra-Asia shipping, Vietnam must invest in infrastructure. This includes improving port efficiency, widening channels for larger ships, enhancing container handling capabilities, and establishing robust rail links between ports and inland container depots. China’s potential role as an investor in Vietnam’s infrastructure development is crucial for sustainable growth.
China’s “Port Diplomacy” And Regional Investments
China’s investments in overseas ports, often described as “port diplomacy,” become a strategic tool in its broader diplomatic toolkit. The country holds significant ownership stakes in ports across Asia, contributing to its global leverage.
As the shift of manufacturing out of China gains momentum, China is likely to explore investment opportunities in regional ports, further shaping the dynamics of global trade.
Navigating The Changing Landscape
The evolving landscape of global shipping underscores the need for adaptability and strategic planning. Industry players must navigate challenges, capitalize on emerging trends, and invest in sustainable practices to thrive in this dynamic environment.
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Source: Qz
