Cargo volume in the Red Sea collapses
The latest update of the Kiel Trade Indicator for the month of December 2023 shows the consequences of the attacks on cargo ships in the Red Sea. The volume of containers transported there plummeted by more than half and is currently almost 70 percent below the volume that would usually be expected. As a result, freight costs and transportation time in goods traffic between East Asia and Europe have risen and imports and exports from Germany and the EU are in some cases significantly lower than in the previous month of November 2023 (price and seasonally adjusted).
The latest data update of the Kiel Trade Indicator for December 2023 points to a continuation of the slightly negative trend in global trade and trade between major economies. The conflict in the Middle East, in particular attacks on container ships in the Red Sea, is likely to be one reason for the weak trading month.
Global trade fell by 1.3 percent from November to December 2023 (price and seasonally adjusted).
For the EU, the indicator figures for both exports (-2.0 percent) and imports (-3.1 percent) are clearly in the red.
Germany's foreign trade continued the weak phase of recent months, with exports (-2.0 percent) and imports (-1.8 percent) falling again month-on-month.
The Kiel Trade Indicator value for exports (-1.5 percent) and imports (+1.0 percent) shows a decline in December trade in the USA, even though the sea route through the Red Sea and the Suez Canal plays a lesser role there than in Europe.
China's trade is bucking the trend, with figures for both exports (+1.3 percent) and imports (+3.1 percent) pointing upwards. Parts of this increase may be due to an annual peak before the Chinese New Year.
The number of containers shipped in the Red Sea fell drastically by more than half in December. The current volume is only around 200,000 containers per day, compared to around 500,000 containers in November. This means that the current volume is 66 percent below the volume actually expected, calculated from the freight volume for the years 2017 to 2019.
Instead of sailing through the Red Sea, the ships now sail around Africa and the Cape of Good Hope, a detour that takes 7 to 20 days. The longer journey time has significantly increased freight rates, with the transport of a 40-foot standard container between China and Northern Europe currently costing over 4,000 US dollars, compared to around 1,500 US dollars in November. However, the current price is still a far cry from the drastic spikes during the coronavirus pandemic, when transporting a container on this route cost up to 14,000 US dollars.
The Kiel Trade Indicator estimates trade flows (imports and exports) of 75 countries and regions worldwide, the EU and world trade as a whole. Specifically, the estimates cover over 50 individual countries as well as regions such as the EU, sub-Saharan Africa, North Africa, the Middle East or emerging Asia. It is based on the evaluation of ship movement data in real time. An algorithm programmed at the Kiel Institute uses artificial intelligence to analyze the data and translates the ship movements into price and seasonally adjusted growth figures compared with the previous month.
