Executive Briefings

Liner Operators Increasingly Drawn to Intra-Asia Trade

The start of a free-trade agreement between China and six Southeast Asian nations in January 2010 looks to be the proverbial pebble dropped in a pond.

The ripple effect is already being felt in the container shipping industry, where liner carriers are increasingly focusing their attentions on the high-growth intra-Asia trade, sometimes at the expense of more established long-haul trades.

The underlying growth drivers of this trade - increased consumer power in Asia's emerging markets and trade of semi-finished goods and raw materials - has only been aided by the free-trade agreement, known as the ASEAN-China Free Trade Area (ACFTA). It links China with Singapore, Malaysia, Thailand, the Philippines, Indonesia and Brunei.

As of Jan. 1, the agreement cut tariffs on goods exported from the ASEAN bloc to China from 9.8 percent to 0.1 percent. In the other direction, tariff levels fell from 12.8 percent to 0.6 percent. From January to August of this year, two-way trade between the six ASEAN nations and China grew 47.4 percent to $185.4bn, compared to the same period in 2009.

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The start of a free-trade agreement between China and six Southeast Asian nations in January 2010 looks to be the proverbial pebble dropped in a pond.

The ripple effect is already being felt in the container shipping industry, where liner carriers are increasingly focusing their attentions on the high-growth intra-Asia trade, sometimes at the expense of more established long-haul trades.

The underlying growth drivers of this trade - increased consumer power in Asia's emerging markets and trade of semi-finished goods and raw materials - has only been aided by the free-trade agreement, known as the ASEAN-China Free Trade Area (ACFTA). It links China with Singapore, Malaysia, Thailand, the Philippines, Indonesia and Brunei.

As of Jan. 1, the agreement cut tariffs on goods exported from the ASEAN bloc to China from 9.8 percent to 0.1 percent. In the other direction, tariff levels fell from 12.8 percent to 0.6 percent. From January to August of this year, two-way trade between the six ASEAN nations and China grew 47.4 percent to $185.4bn, compared to the same period in 2009.

Read Full Article