05.02,2024 - Worsening attacks in the Red Sea have quickly unwound some of the gains on Bloomberg’s Trade Tracker with supply chain bottlenecks threatening to choke the recovery in global exports. Four out of 10 gauges on the dashboard were in below-normal range in February, from just three at the start of the year as Taiwan’s export orders plunged more than expected. Shipping volumes in Los Angeles slipped back into normal territory after showing a positive reading, while port activity in Singapore and Hong Kong likewise dropped.
Sentiment is souring amid fears the improvement in global trade could be short-lived as Yemen’s Houthi rebels steadily ramp up their attacks on commercial vessels in the Red Sea. That’s doubled freight costs and lengthened delivery schedules at a time when inflation has yet to come down meaningfully and some intermediate goods are still experiencing shortages, according to a Moody’s Analytics note. While firms can likely absorb the higher prices for now, there are wider economic implications should the Red Sea become an nonviable trade route. Europe’s car makers already face stiff competition from China in securing market share in Asia, Moody’s Analytics said. Meanwhile, the latter’s reliance on Europe for specialized machinery and chemicals means that significant disruptions could “impair production in Asia’s advanced manufacturing hubs, stretching inventories and leaving assembly lines idle,” it said.
Asia had just seen a much-awaited turnaround in its factory activity in January, with South Korea and Vietnam returning to expansion mode amid stronger demand in domestic and overseas markets. The manufacturing downturn in Taiwan and Japan also eased. We’ve selected measures across shipping, sentiment and export volumes to watch. For the clearest indication, we measured how far each gauge is from historic norms. These data update in real time from the Bloomberg Terminal as they’re reported. Supply chains drive global trade. Stay informed with the latest developments in our Supply Lines newsletter, delivered weekdays.
Sentiment is souring amid fears the improvement in global trade could be short-lived as Yemen’s Houthi rebels steadily ramp up their attacks on commercial vessels in the Red Sea. That’s doubled freight costs and lengthened delivery schedules at a time when inflation has yet to come down meaningfully and some intermediate goods are still experiencing shortages, according to a Moody’s Analytics note. While firms can likely absorb the higher prices for now, there are wider economic implications should the Red Sea become an nonviable trade route. Europe’s car makers already face stiff competition from China in securing market share in Asia, Moody’s Analytics said. Meanwhile, the latter’s reliance on Europe for specialized machinery and chemicals means that significant disruptions could “impair production in Asia’s advanced manufacturing hubs, stretching inventories and leaving assembly lines idle,” it said.
Asia had just seen a much-awaited turnaround in its factory activity in January, with South Korea and Vietnam returning to expansion mode amid stronger demand in domestic and overseas markets. The manufacturing downturn in Taiwan and Japan also eased. We’ve selected measures across shipping, sentiment and export volumes to watch. For the clearest indication, we measured how far each gauge is from historic norms. These data update in real time from the Bloomberg Terminal as they’re reported. Supply chains drive global trade. Stay informed with the latest developments in our Supply Lines newsletter, delivered weekdays.
