The forces of supply chain reorganization, regional economic vulnerabilities, labor market concerns, and industry-specific challenges and opportunities continue to shape the economic horizon. In the residual legacies of the pandemic, companies sustain efforts to reorganize their supply chains. Remarkably, despite calls for diversification, German companies have significantly increased their investments in China, to shorten their supply lines to Asian consumers.

In the U.S., signs of an economic slowdown are becoming more evident. The July jobs report fell short of expectations, and the unemployment rate has been rising for four consecutive months, which has fueled fears of an impending recession, with the probability now at 35%. The U.S. labor market’s weakening demand and the global manufacturing slowdown are further exacerbating these concerns. Similarly, Europe is experiencing economic fragility, with the eurozone’s economic sentiment taking a hit, particularly in Germany, where investor and consumer confidence have sharply declined. Despite modest growth in disposable income and GDP in some European countries, the overall outlook remains precarious.

China’s economic struggles are also becoming more pronounced, with youth unemployment rising to 17.1% in July, the highest level this year. The country’s economic momentum continues to falter, with sluggish confidence impacting both consumption and investment. This slowdown threatens the Chinese government’s annual growth targets and has broader implications for global trade. Meanwhile, Japan is showing signs of economic revival, with better-than-expected GDP growth in the second quarter. However, Japan’s economy faces challenges as it navigates a leadership transition and ongoing concerns about monetary policy.

Withing this frame, the logistics and shipping industries are navigating a complex environment. The risk of U.S. seaport strikes poses a significant threat to supply chains, with potential disruptions expected if strikes occur at key ports. Companies are taking preemptive actions to mitigate these risks by advancing import schedules. On the other hand, the China-Europe rail freight link has seen a notable increase in volumes, although rising costs are a concern. Major shipping companies like Hapag-Lloyd and Evergreen Marine have reported strong financial performance despite global disruptions, reflecting the sector’s resilience. However, the potential for future disruptions highlights the need for continued vigilance and strategic planning in the logistics and shipping industries.

Weekly Highlights

• The probability of a recession in the US now stands at 35%
• UK economy grows strongly in Q2 but slowdown seen ahead
• China’s economy fails to pick up after worst stretch in five quarters
• China-Europe rail freight volumes up 11% YoY in first seven months of 2024
• UK’s Royal Mail parent to sell US freight business to DC Logistics
• Early US imports lessen risk from potential seaport strike, economist says
• Uber Freight Launches Major Shipping Platform Update

Economic News

“Companies saw a lot of bottlenecks forming during the pandemic and the blockade of the Suez Canal. They are determined to reduce all risks in their supply chains by reorganising them on a regional basis, through localisation. That is happening a lot in China, especially.”

Friedolin Strack, a China expert at the BDI

The probability of a recession in the US now stands at 35%

After a year of surprisingly strong growth, the U.S. economy is now showing signs of slowing. The July jobs report was softer than expected, with the unemployment rate rising for the fourth straight month — sparking a market sell-off and heightening fears of an impending recession… Read more

Democrats on defensive after Kamala Harris’s economic plans poorly received

Democrats rushed to defend Kamala Harris’s newly unveiled economic plans on Sunday, amid criticism that they amounted to gimmicks that would fail to tackle inflation… Read more

Youth unemployment in China jumps to 17.1% in July

Youth unemployment in China ticked up to 17.1% in July, official figures showed, the highest level this year as the world’s second-largest economy faces mounting headwinds… Read more

China’s economy fails to pick up after worst stretch in five quarters

China’s weakening economic momentum failed to pick up as sluggish confidence weighs on consumption and investment, putting the government’s annual growth target at risk… Read more

Europe’s economic growth is extremely fragile

European policymakers will be hoping that two consecutive quarters of growth are equally notable. Data released on August 14th showed that, in the second quarter of the year, the EU’s economy once again grew by 0.3% against the previous quarter… Read more

Good news for Europe’s top economies as disposable income rises

Disposable household income per capita in Europe’s top economies crept up by 0.2% to 3.4% in the first three months of 2024. During the same period, real GDP per capita also saw growth across most European countries… Read more

UK economy grows strongly in Q2 but slowdown seen ahead

Britain’s economy recorded a second quarter of strong growth as it recovered from last year’s shallow recession but it lost momentum as it entered the second half of 2024, suggesting the Bank of England remains on course to cut interest rates again… Read more

UK unemployment falls slightly as pay growth slows

The UK’s unemployment rate has fallen slightly, official figures suggest. Unemployment was 4.2% in the three months to the end of June, down from 4.4% over the previous quarter… Read more

Germany’s economic sentiment crashes in August, dragging eurozone down

Germany and the eurozone’s economic sentiment plunged in August, driven by global trade slowdown, stock market turmoil, and Middle East tensions. The ZEW Economic Sentiment Index, a key indicator that gauges the expectations of financial experts, fell dramatically from 41.8 points in July to just 19.2 points in August… Read more

German investment in China soars despite Berlin’s diversification drive

German direct investment into China has risen sharply this year, in a sign that companies in Europe’s largest economy are ignoring pleas from their government to diversify into other, less geopolitically risky markets… Read more

Japan’s Economy Shows Signs of Life as Spending Revives

The Japanese economy returned to growth in the April-June quarter, showing signs that the healthy economic cycle led by spending that policymakers have long sought to create is taking shape…Read more

UK unemployment falls slightly as pay growth slows

The UK’s unemployment rate has fallen slightly, official figures suggest. Unemployment was 4.2% in the three months to the end of June, down from 4.4% over the previous quarter… Read more

Japan second-quarter GDP beats expectations, expands 0.8% from previous quarter

GDP rose 0.8% quarter on quarter compared to Reuters poll estimates of a 0.5% rise. This was also a reversal from the revised 0.6% fall seen in the first quarter… Read more

Japan’s change of leadership comes at challenging time for monetary policy

As Japan’s race to select a new leader heats up, candidates will be scrutinized for their views on monetary policy, with the shake-up coming at a pivotal moment when the economy is just emerging from decades of deflation… Read more

“U.S. news hints at a sharper-than-expected weakening in labor demand and early signs of labor shedding. The latest business surveys also suggest a loss of momentum in global manufacturing and in the Euro area — weak links in the expansion that we have expected to lift this year. While recognizing additional uncertainties related to the political backdrop, we have not altered our assessment of the probability of a recession by the end of next year”

Bruce Kasman, Chief Global Economist at J.P. Morgan

Industry News

“ The risk of port strikes was something that had to be dealt with – by taking early action. Shipping cargoes next week … is really too late – as it may just be sitting on the water” if the ports are hit by widespread strikes.”

Peter Sand, chief analyst at pricing platform Xeneta

China-Europe rail freight volumes up 11% YoY in first seven months of 2024

In the first seven months of this year, the China-Europe Railway Express operated a total of 11,403 trains, transporting nearly 1.23 million TEUs (twenty-foot equivalent units) of goods, representing year-on-year increases of 12 percent and 11 percent, respectively… Read more

Troubled South African Rail Monopoly Defends Pace of Recovery

South Africa’s state logistics company said it’s doing the best it can within the constraints it faces and is making some progress, after being blamed by business and government for sapping economic growth and costing jobs… Read more

UK’s Royal Mail parent to sell US freight business to DC Logistics

International Distributions Services, the parent company of Royal Mail, announced on Monday that its parcel services business, GLS, will sell its U.S. freight divisions to California-based DC Logistics…. Read more

Earnings call: Hapag-Lloyd sails through H1 2024 with robust financials

Hapag-Lloyd, a leading global shipping company, reported a robust financial performance in the first half of 2024, with an EBITDA of approximately $0.9 billion despite facing disruptions… Read more

China Launches New Freight Routes to Southeast Asia: Guangzhou, Vientiane, and Bangkok Now Connected

China introduced new cross-border routes connecting Guangdong-Yunnan-Mekong and China-Laos-Thailand, this is reported by the railway transport news portal Railway Supply… Read more

DC Logistics deal with GLS will revive Mountain Valley Express

GLS Group will sell its U.S. less-than-truckload and brokerage operations to California-based DC Logistics, the companies announced Aug. 12. The acquisition, expected to close next month, is part of DC Logistics’ ambition to grow into one of the nation’s 20 largest LTL carriers… Read more

Possible US seaport strike could back up goods for months, shipping experts say

A potential strike at U.S. seaports on the East Coast and Gulf of Mexico could back up cargo there for weeks or even months, shipping experts said on Wednesday. Retailers like Walmart and other importers have been rushing goods in ahead of the Sept. 30 expiration of the union contract covering some 45,000 dockworkers at three dozen seaports from Texas to Maine…. Read more

Early US imports lessen risk from potential seaport strike, economist says

U.S. retailers’ early back-to-school, Halloween and Christmas holiday imports could lessen cargo delays and financial damage should workers at vital seaports such as New York and Houston strike in October, a trade economist said on Tuesday… Read more

China-Europe Freight Train Prices Are Climbing Further in August

The cost of moving goods via the China-Europe rail freight link has jumped since May because of the Red Sea crisis and a pickup in trade, with prices rising yet again this month, according to initial data… Read more

Evergreen rides surging freight rates to big jump in H1 profits

Strong demand and surging freight rates powered Evergreen Marine, Taiwan’s largest container line, to report a first-half net profit of $1.4 billion Tuesday, up from $318 million in the same period one year ago… Read more

Etihad cargo revenue up 10% in first half

Etihad Airways’ cargo revenue increased by approximately 10% in the first half of this year compared to the same period of 2023… Read more

“The China-Europe rail service has been a vital link in facilitating trade and connectivity between China and Europe, serving as a key component of the Belt and Road Initiative,” says the China State Railway Group.”

Magdalena Rybicka, Director of the Institute of Asian Studies at the Vistula Academy of Finance and Business

Ranon Quote of the Week

“ With monetary policy changing, the markets are very nervous. I think politicians need to learn that if they say things carelessly, the markets will react in a big way.”

Shinichiro Kobayashi, chief economist at Mitsubishi UFJ Research & Consulting

Technology, Policy and Sustainability Updates

China rapidly gasifies its freight vehicles

In June 2024, diesel fuel consumption in China decreased by 11% year-on-year (YoY) and reached 3.9 mln barrels per day (bpd). This contraction in demand became the maximum one starting from July 2021… Read more

Uber Freight Launches Major Shipping Platform Update

Uber Freight is launching what it has called the largest evolution of its freight quoting and booking platform, the company announced Aug. 15… Read more