By Martina Kao    Photo：CANVA

Globalization has been an important engine driving the development of the world economy in recent decades. It has promoted the free flow of goods, services, capital and people around the world through lowering trade barriers, technological advancement and falling transportation costs. However, in recent years, with intensified geopolitical tensions, rising protectionism, and the impact of emergencies such as the COVID-19 epidemic, a wave of "deglobalization" seems to be emerging, raising questions about whether global trade flows are slowing down. and how this will affect the container shipping industry is of widespread concern.

The definition and causes of globalization and deglobalization

Globalization is a complex process involving economic, political, cultural and other levels. At the economic level, globalization is mainly manifested in the growth of international trade and investment, the expansion of multinational corporations, and the formation of global supply chains. "Deglobalization" can be understood as the reversal of the globalization process, manifested in the decline of international trade and investment, the rise of regionalism, and the localization or regionalization of supply chains.

There are many factors driving deglobalization:

• Geopolitical tensions: Rising competition among major powers, regional conflicts and geopolitical risks have led to the rise of trade protectionism and even the emergence of trade wars, hindering the normal conduct of international trade. For example, in recent years, Sino-US trade friction has had a significant impact on global trade.

• Protectionism and populism: In order to protect domestic industries and employment, some countries have adopted protectionist measures such as raising tariffs and erecting trade barriers, which have restricted imports and led to the shrinkage of international trade.

• COVID-19: The epidemic has exposed the fragility of global supply chains, and many companies have begun to re-evaluate their supply chain strategies, tending to move production back home or to neighboring regions to reduce reliance on long-distance transportation.

• Technological changes: The development of new technologies such as automation and artificial intelligence has reduced production's dependence on labor costs, allowing some companies to relocate production back to high-cost countries, thereby reducing the need for international trade.

Are trade flows slowing down?

To determine whether trade flows are slowing down, relevant data and indicators need to be examined. Although some indicators show that global trade growth has slowed down, it cannot simply be concluded that "trade flows have slowed down."

• Data from the World Trade Organization (WTO) show that the growth rate of global merchandise trade has declined in recent years, but still maintains positive growth.

• Forecasts from the International Monetary Fund (IMF) also show that global trade volume will continue to grow in the next few years, but the growth rate may be slower than in past decades.

Changing trends in trade flows

1. The rise of regional trade

As global supply chains shorten, intra-regional trade activity increases. For example, intra-Asian trade has become closer, driven by the Regional Comprehensive Economic Partnership (RCEP).

2. Prioritization of national strategic materials

Countries are focusing more resources on producing critical products, such as medical supplies, semiconductors and energy, and reducing their dependence on external supplies.

3. Increase in bilateral trade agreements

International cooperation is changing from multilateral agreements to bilateral agreements, which further strengthens trade relations between specific countries, but also increases the uncertainty of international trade.

4. The flow of goods slows down

The movement of goods has generally slowed down, especially over long distances, due to tighter customs regulations, supply chain disruptions and increased logistics costs.

Therefore, a more accurate description may be "global trade growth is slowing down" rather than "trade flows have slowed down".

The impact of deglobalization on container shipping

Container shipping is an important part of international trade and is responsible for most of the world's commodity transportation. The trend of deglobalization has had a multifaceted impact on the container shipping industry:

• Slowing growth in freight volume: If global trade growth continues to slow down, or even experiences negative growth, it will directly lead to a decline in demand for container transportation and have an impact on the container shipping industry.

• Route structure adjustment: With the localization or regionalization of the supply chain, the demand for some long-distance international routes may decrease, while the demand for short-distance routes within the region may increase, leading to adjustments to the route structure.

• Excess shipping capacity: In recent years, with the trend of larger ships, the shipping capacity of container ships has continued to increase. If freight volume growth slows down, it may lead to overcapacity, intensify market competition and reduce freight rates.

• Impact on ports and infrastructure: Changes in freight volume will affect port throughput and infrastructure utilization, requiring ports and related industries to make corresponding adjustments.

• Uneven distribution of empty cabinets

As the flow of goods changes, some areas are facing a shortage of empty containers, while other areas may have a surplus of counters, increasing logistics costs and management difficulties.

• Increased importance of intermodal transport: With the complexity of supply chains and diversification of transportation methods, the importance of intermodal transport (such as sea-rail combined transport, sea-land combined transport) will become more prominent, and container shipping companies need to strengthen cooperation with other transportation cooperation to provide more comprehensive logistics solutions.

• Pressure for green shipping

As countries pay more attention to environmental protection, shipping companies need to accelerate the adoption of low-carbon technologies and optimize shipping efficiency to comply with environmental standards and reduce transportation costs.

Response strategies for the container shipping industry

Facing the challenges brought about by deglobalization, the container shipping industry needs to adopt active response strategies:

• Flexible adjustment of transportation capacity: Flexible adjustment of transportation capacity deployment according to changes in market demand to avoid excess transportation capacity.

• Optimize the route network: According to changes in trade flows, adjust the route network, open up new routes, and improve route efficiency.

• Strengthen technological innovation: Apply new technologies to improve ship efficiency and reduce operating costs.

• Expand diversified businesses: Not only rely on traditional container transportation business, but also expand diversified businesses such as logistics, warehousing, and supply chain management to improve risk resistance.

• Strengthen cooperation and alliances: Achieve resource sharing and improve market competitiveness through alliances, cooperation and other means.

• Pay attention to regional trade development: In addition to paying attention to the global trade situation, we must also pay close attention to the development trends of regional trade and seize new growth opportunities.

• Further promote environmental protection measures

Cooperate with technology companies to develop new energy ships and adopt carbon offset mechanisms to cope with environmental pressure.

While a number of factors are driving deglobalization, globalization remains a complex and multifaceted process with a low likelihood of complete reversal. What is more likely to happen is the adjustment and reshaping of the globalization process, such as the development of regional trade and the diversification of supply chains. For the container shipping industry, it is important to pay close attention to changes in the global trade situation, actively respond to challenges, and seize new development opportunities. Through strategies such as flexibly adjusting shipping capacity, optimizing route networks, strengthening technological innovation, expanding diversified businesses, and strengthening cooperation and alliances, the container shipping industry can still maintain competitiveness and achieve sustainable development in the new global trade pattern.

Furthermore, it should be emphasized that the above analysis is based on existing trends. There are still uncertainties in the future development of global trade and container shipping. For example, new technological breakthroughs, geopolitical events, etc. may have a significant impact on it. Therefore, continuous monitoring and analysis, as well as flexible response strategies, are crucial to the long-term development of the container shipping industry.

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