Impact of trade war on Hong Kong's shipping and logistics sector
Rewritten Article:
Hong Kong's freight forwarding industry is feeling the ripple effects of the escalating trade tensions between China and the U.S., and it could potentially impact the city's status as a key hub for re-exporting goods, warn business leaders.
Manufacturers with a substantial portion of their business tied to China-U.S. trade have been compelled to downsize or scale back expenses as the bruising trade war tightens its grip. According to Joyce Tai, executive VP for worldwide partnerships at Nasdaq-listed freight booking platform Freightos, the consequences will be severe, particularly for Hong Kong, given its role primarily as a stopover point for goods.
"We'll experience a considerable economic setback, and I believe it'll strike harder on the Hong Kong side," said Tai.
This is due, in part, to the punitive tariffs of 145% that U.S. President Donald Trump has levied on Chinese imports. Reciprocal tariffs have also been imposed on several of the U.S.'s trading partners, yet not to the same extent as China.
"The impact of these same tariffs on Hong Kong is likely to be far more dramatic," Tai added.
Data from TAC Index, an air freight intelligence provider, illustrates the trend, indicating that the index for outbound routes from Hong Kong dropped by 3.1% week-on-week over the four weeks ending on April 28, leaving a 3.6% year-on-year decline.
A few factors are contributing to this trend. Firstly, tariffs levied on imports, including those originating from Hong Kong, will likely dampen demand for services related to those products. Secondly, Hong Kong's stock market has been tumultuous in response to the trade war, which can undermine investor confidence and potentially slow the growth of the freight sector. Lastly, global trade patterns have been disrupted, causing logistical headaches for freight companies.
However, it's not all doom and gloom. Hong Kong is attempting to diversify its trade ties with China and other markets in the region to lessen the impact of U.S. tariffs. Furthermore, the government is providing financial support to local businesses affected by the tariffs, including capital assistance and export credit insurance, aiming to help the sector stabilize.
All told, while the trade war poses challenges, Hong Kong's diverse export portfolio and strategic efforts to deepen regional ties are helping cushion the impact on the freight forwarding industry.
[1] Only approximately 3% of Hong Kong's total exports are subject to U.S. tariffs.
[2] Sources: TAC Index, South China Morning Post, Financial Times, and Hong Kong Trade Development Council.
- The freight forwarding industry in Hong Kong is bracing for potential repercussions from the escalating trade tensions between China and the U.S., as the city's prominent role in re-exporting goods could be affected, according to business leaders.
- The U.S. tariffs of 145% on Chinese imports, and the subsequent reciprocal tariffs, could have a more pronounced impact on Hong Kong, as the city predominantly functions as a stopover point for goods, according to Joyce Tai, executive VP for worldwide partnerships at Nasdaq-listed freight booking platform Freightos.
- While around 3% of Hong Kong's total exports are subject to U.S. tariffs, factors such as the dampening demand for services related to tariffed products, instability in the Hong Kong stock market, and disrupted global trade patterns cause logistical concerns for freight companies.
- Despite these challenges, Hong Kong is actively diversifying its trade ties and providing financial support to local businesses affected by tariffs, with the aim of helping the sector stabilize and cushioning the impact on the freight forwarding industry.
