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Forecast: Despite China Slowdown, Expect E. Africa Trade, Shipping Increases

Forecast: Despite China Slowdown, Expect E. Africa Trade, Shipping Increases

From CommoditiesNow.

China’s trade will continue to increase by more than 5 percent per year between 2015 and 2020 despite recent setbacks caused by its marked economic slowdown, the World Trade Service of IHS Maritime & Trade forecasts.

One new trend is the move towards larger container ships to streamline the supply chain.

Trade routes from China to Africa are expected to see a marked increase over the next five years, with the highest growth expected to be seen from the East African to China route, incorporating Malawi, Mozambique, Zambia, and Zimbabwe.

“Trade between East Africa and China is expected to increase by 91 percent by 2020,” said Krispen Atkinson, principal analyst at IHS Maritime & Trade. “It’s all around manufactured goods. East Africa is becoming a new hub for the Chinese.”

Chinese leadership has publicly announced its commitment to develop infrastructure and promote regional integration in East Africa.

“In the coming years, China’s relationship with East Africa will change,” said Natznet Tesfay, head of sub-Saharan Africa analysis at IHS County Risk. “Right now, the focus is on importing raw materials and exporting manufactured goods. But, Chinese investments in enhancing regional interconnectivity will enable it to take advantage of comparatively lower operational costs and to onshore manufacturing activity in East Africa.”

The four alliances that dominate east-west trade are pushing the trend towards container ships capable of carrying 20,000 boxes (20 foot equivalent units), in their quest to reduce unit costs with ever more efficient vessels. Current container ships hold around 13,000 boxes, so the new super-containers capable of transporting over 50 percent more cargo. Their push has meant further capacity has become available in the trade.