Kiel Trade Indicator December 2023
The latest data from the Kiel Trade Indicator for the month of December 2023 suggests that the slightly negative trend in world trade could continue. The Institute for World Economics (IfW Kiel) cites attacks on container ships in the Red Sea in connection with the Middle East conflict as a possible cause.
According to the recent report from IfW, global trade declined by 1.3 percent (price- and seasonally adjusted) from November to December 2023. The indicator values for the European Union show significant declines in both exports (-2.0 percent) and imports (-3.1 percent).
Diversion of ships around the Cape of Good Hope
According to IfW, the volume of transported containers in the Red Sea has dropped by over 50 percent and is currently almost 70 percent below the expected volume. This development has led to an increase in freight costs and transportation times in trade between East Asia and Europe.
Julian Hinz, Director of the Center for Trade Policy Research and the new head of the Kiel Trade Indicator, says, “The diversion of ships due to the attacks in the Red Sea around the Cape of Good Hope in Africa results in a significant extension of the time for transporting goods between Asian production centers and European consumers, up to 20 days.” This is also reflected in the declining trade figures for Germany and the EU, as transported goods are still at sea and have not been unloaded in ports as planned.
The route around the Cape of Good Hope extends the transportation time by 7 to 20 days. This has led to a significant increase in freight rates. Currently, the costs for transporting a 40-foot standard container between China and Northern Europe exceed 4,000 US dollars. In comparison, prices were around 1,500 US dollars in November.
Source: www.kloepfel-consulting.com