Gone are assertions that China and the rest of the Asia Pacific region would take on the responsibility for driving global economic growth. Recent economic numbers from some of those countries have been as bad as the figures from anywhere else in the world. For example, Singapore's government now expects its economy to shrink by 2-5% over the next 12 months. Formerly a dynamo of the region due its pivotal position in intra-Asian and global trade, Singapore has been savaged by the drop in consumer demand for its re-export services, the crash in the chemical sector and a fall in sea and air traffic.
Although the port of Singapore reported an overall rise of 7% in container traffic during 2008, the single month of December saw a 14% fall. The experience of Singapore's Changi airport was similar, with a 2% fall in cargo volume for the whole of last year but monthly year-on-year declines of 14.2% in November and 21.4% in December.
Japan's recent performance has, if anything, been worse. Partly as the result of the high value of the Yen, Japan has seen its exports fall by a third. Companies such as Sony, Toyota and Canon are under acute pressure not merely to reduce production but to concentrate that rationalization at their Japanese facilities. Whilst the Yen may fall in value, such a trend would be an augur of the much-changed competitive position of Japan in world markets. One indicator of the latter trend was the remarkable recent announcement that the big three Japanese global shipping companies--NYK, MOL and 'K' Line--are to scrap 10% of their car carrier fleet. Once the platform for the flood of Japanese exports to the west, that sector boomed as the flow of cars became increasingly complex. The newly announced car carrier fleet cuts demonstrate both the dire short-term situation of the automotive sector and a longer-term view on the prospects of exports out of Japan.
Whilst it is difficult to see through the immediate effects of the global financial and economic crisis, it is important to try and discern the longer terms trends. Not only are powerful economies such as Singapore and Japan changing their competitive positions, but also the wider Asian supply chain is continuing to evolve.
Specifically, the relationship between China and other Asia Pacific economies could be reshaped as the role of that region in the global economy changes. That would imply huge opportunities for the development of new types of logistics services in the Asia Pacific region, although identifying them through the present fog of global recession will not be easy.
Timely, incisive articles delivered directly to your inbox.