PwC: China ready to overtake the US
PwC: China ready to overtake the US
4/4/2011 16:28
China set to overtake the US and dominate global trade by 2030, says new PwC report

World trade has bounced back following the global economic crisis; but in the coming years the trade landscape will undergo fundamental change, as the emerging economies begin to dominate the top sea and air freight routes by 2030. This is one of the key findings of the latest PwC report into the future of world trade, as it takes an in-depth look at the top 25 sea and air freight routes in 2030.

In the report, PwC economists use special modelling techniques to project bilateral trade – requiring either sea or air freight – between 29 economies over the next two decades. Key findings include:

• China will overtake the US and dominate global trade in 2030

• Four key areas could present significant opportunities for transport and logistics firms

o Trade within the Asia-Pacific region

o Trade between emerging and developed economies – inspired by Germany/China

o Trade between emerging economies, such as parts of Asia and Latin America

o Trade between China and Africa

Global trade suffered a sharp decline in 2009, but has bounced back robustly over the past year, and is estimated to have ended 2010 above its 2008 peak. Trade as a proportion of world GDP is expected to increase in the short term, as the world economy gains strength and confidence. But by 2030 the trade landscape will look quite different, with the emerging and developing economies making up a significant share of global output.

Yael Selfin, head of macro consulting at PwC, said: “Transport and logistics companies will need to adapt to the change in trade patterns to ensure they maximise their profit opportunities.”

Planning for the trends that will shape the trade landscape over the next 20 years would benefit a company in this highly globalised marketplace. “The ‘first mover’ advantage is likely to be important, and establishing a presence before your competitors on a route that becomes a significant global trade flow is likely to be highly valuable,” said Yael.

In fact, the changing picture of global trade is already providing opportunities and challenges for those operating in the transport and logistics (T&L) industry. For example, 73% of T&L CEOs say they are changing their strategies to respond to the growth potential in emerging markets.

Says Klaus-Dieter Ruske, PwC Global T&L leader: “Long-term planning and careful execution are essential when entering new markets. Companies should not only think about securing deals and developing operations, but also about testing opportunities and safeguarding their assets, whether physical, human or intellectual. Economic and political stability, varying business regulations, possible inflation, and competition among countries are also factors to consider when assessing market entry.”

The table below shows how, by 2030, China has moved into a dominant position, appearing in 17 of the top 25 trade pairings. And into the mix come emerging countries such as Indonesia, Malaysia, Nigeria, Thailand, Saudi Arabia, Brazil, India and UAE.

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